Gas prices could be set to rise significantly over the next two years, according to figures supplied by Bord Gáis to the energy regulator, Mr Tom Reeves.

According to the confidential document, margins for Bord Gáis across the residential, small and medium enterprises and corporate sectors have been squeezed.

The figures were compiled earlier this year before Bord Gáis received a 9 per cent increase from Mr Reeves.

Based on the figures, however, the company required a larger rise to recoup fully the costs of supplying gas.

While returns on the supply of gas appear to be low, Bord Gáis managed to produce a pre-tax profit of €114 million in 2002, but contributions from its transmission and distribution systems assisted in this. Third parties which use the gas network have to pay Bord Gáis a fee.

The gas market is due to open fully in July 2005.

Based on the "supply tariff submission" document, new entrants could find it difficult to return a profit on the supply of gas, unless they keep their costs very low.

In July 2004 the market opens for all customers, except domestic householders. In July 2005 the whole market will be open.

According to the document, the supply of domestic customers could cost €144 million, with revenue from this sector coming in at €120 million. Bord Gáis estimates the actual margin from the domestic standard rate customer can be as low as minus 20 per cent. The company estimates a margin of 3 per cent is required in this segment of the market to recover costs.

Future price rises could also come in the small and medium enterprise area. According to the figures, margins in this sector often fall as low as minus 73 per cent. Earlier this year, Bord Gáis was granted a 9 per cent increase for residential customers and a 15 per cent rise for the industrial and commercial sector.

A spokesman for the company said the matter of future price increases was one for the Commission for Energy Regulation (CER). The CER operates what is known as "the regulated tariff formula". This is imposed on Bord Gáis and ensures cost-reflective prices.