An average electricity price rise of 5-6 per cent will be announced officially on September 5th by the Commission for Energy Regulation (CER).

The increase will come into effect from January and will be significantly in excess of inflation, which the Government forecasts will average 3.6 per cent for 2003 and should drop further in 2004.

CER director Mr Tom Reeves is still deciding on how to balance tariffs between industrial, commercial and domestic customers, but it is understood domestic customers will not have to pay anymore than 6 per cent.

Last year Mr Reeves put up average tariffs by 9.8 per cent. This increase proved unpopular with domestic customers having to endure a 13.25 per cent rise. This related to a re-balancing of prices between domestic and industrial/commercial customers.

The need to re-balance the tariffs is no longer a pressing priority, although some independent power producers believe prices in general are too low in Ireland to make the market attractive.

While there may be some consumer dissatisfaction with an increase above inflation this year, the €4 billion investment in the ESB's network is believed to have pushed up the cost of electricity. The cost to the ESB of having to buy wind energy has also added to higher tariffs. General inflation is also an additional factor.

Several weeks ago the ESB submitted its costs for the year ahead and Mr Reeves has been assessing them since.

The final details of the announcement will be finalised next week. At present, domestic electricity prices are 3.7 per cent below the European average.

The price increases are expected to prove unpopular, but the ESB is likely to argue that the ultimate decision is one for Mr Reeves.

Both the CER and the ESB point out that renewal of the electricity network is a major national priority and if the work is not done, power blackouts and disruption to supply - like those which have occurred in the United States - could take place.