ELECTRICITY PRICES are unlikely to rise in the new year for the Republic's 1.7 million households, according to ESB chief executive Padraig McManus, writes BARRY O'HALLORAN.

The Commission for Energy Regulation (CER) is considering an application from the company, which supplies electricity to virtually all homes in the State, for a 5 per cent increase in electricity prices.

The regulator has already given the ESB the go-ahead for a 17 per cent rise in electricity charges, which was passed on to its customers in the autumn. Its application for a further 5 per cent hike was based on record world prices for fuels such as oil and gas, which are used to generate electricity.

These prices have since fallen by up to 60 per cent and Mr McManus conceded yesterday that it was unlikely the regulator would sanction a further increase in power charges for January.

"That is for the CER to decide, but I think it is unlikely," he said. On Thursday, it emerged that the CER was similarly likely to rule against any further increase in gas prices in the new year.

Mr McManus was speaking in London, where ESB International (ESBI), a subsidiary of the State company, was launching a €4 billion expansion plan for its operations in Britain.

The plans involve the company building power plants with a total capacity of 3,000 megawatts (MW) of electricity - enough to power three million homes - by 2020, and acquiring 200MW of wind power in the British market.

It emerged recently that ESBI was planning a €500 million investment in the construction and operation of an 860MW plant in Carrington, near Manchester. This will be up and running in five years and will produce enough electricity to supply about one million homes. As part of this deal, it has taken a majority stake in a local company, Bridestone Power.

It is also building a €800 million power plant in Southampton with Scottish & Southern Energy, which has plans to begin competing with the ESB in the Republic's domestic electricity market from next year.

Speaking at the launch yesterday, Mr McManus pointed out that the regulator had blocked the company from building any more power plants in its home market once it has completed a €400 million facility in Cork which is currently under construction.

The regulator's approach is designed to boost competition and cut the State company's market share to 40 per cent.

This means that the company needs to look overseas for expansion. Mr McManus has made it clear in the past that the company sees expandion of ESBI's operations in Britain as the first stage in this.

"There is the language and we understand the culture here," he said yesterday.