Gas price set to increase by up to 19% from October

MORE THAN half a million households could face an average increase of €13.50 a month for gas supplies if Bord Gáis gets the go-ahead for a 19 per cent increase in its price.

Bord Gáis yesterday said it made pre-tax profits of €166.4 million in 2007, a 29 per cent increase on the €129 million it earned in 2006. Turnover was up 10 per cent at €1.2 billion.

But the State company's chief executive, John Mullins, said that, on the basis of recent world gas price increases, it would have to seek an extra 17-19 per cent in the price it charges its customers.

According to the Commission for Energy Regulation (CER), last October's 11 per cent reduction in gas prices saved €100 a year on the average household gas bill.

On that basis, a 19 per cent increase would add €13.50 a month or €162 a year to average household gas bills. A 17 per cent hike would add €12.60 a month.

Mr Mullins pointed out that the final increase Bord Gáis would seek depended on movement in the fuel's price on world markets.

The company will have to apply to the CER for permission on any price change. Bord Gáis is due to make its submission to the watchdog in July. The CER will then decide what price the company can charge its customers and announce it in September.

Customers will be charged at the new rate from October and the price is generally applied for a 12-month period. The company's customers include more than 500,000 households as well as a range of large and small businesses.

Mr Mullins pointed out that world oil prices drove natural gas charges. He pointed out that crude had hit $126 a barrel this week. "Clearly, price rises are inevitable," he said.

Earlier this week, natural gas topped 85 pence sterling per unit in London, which was a record.

However, Mr Mullins said that the company was aware that its domestic customers were cutting down on the amount of fuel they used in order to save money. The company believed households would use 3 per cent less gas this year.

New customers will offset the fall in sales which will result and, overall, Bord Gáis expects zero per cent growth in its domestic business in 2008, Mr Mullins said.

He said that the Corrib gas field will supply 60 per cent of Irish demand when it begins producing. It is scheduled to do this in October 2009.

This is unlikely to have a major impact on price, as the fuel's price is determined by trade on world markets. However, Mr Mullins said it would help to underpin security of supply for a decade.

Gas supplies about 25 per cent of Irish energy needs, which is in line with the European average. The fuel is used to generate electricity and the new power plants which are in planning or are being built will be gas-fired.

Most of the gas used in Ireland comes from Norwegian and British fields in the North Sea. Less than 1 per cent comes from Russia, which is one of the world's biggest producers.