Domestic electricity prices in the Republic are the third-lowest in the European Union, a new survey has found.

According to the research from the UK Electricity Association, only customers in Greece and Finland are paying lower rates. However, the survey showed the ESB's industrial prices to be slightly above the average for EU states.

The ESB's rate to industry - £4.38 sterling (£4.90) per kilowatt hour - was the seventh highest in the EU, above the UK, Spain, the Netherlands, France, Greece, Sweden, Luxembourg and Denmark.

The rates included standing charges, local taxes (including VAT) and were provided by suppliers in each state.

The ESB looked for a 3 per cent rise in its domestic rates last year, but had its request turned down by the Minister for Public Enterprise, Ms O'Rourke.

The company wants the "tariff re-balancing" so it can offer lower rates to industry when 28 per cent of the market here is liberalised next year.

Other operators like Northern Ireland Electricity and Scottish Power are expected to undercut the ESB's rates when their generating stations open in the next few years.

Earlier surveys also showed the ESB's domestic charges at the lower end of the EU league table and its industrial charges in the upper half. A spokeswoman for the ESB said yesterday its prices had fallen by "30 per cent in real terms in the last 10 years".

"Despite implementing significant efficiencies in the operation of the ESB and investing significantly in generation and supply infrastructure, the prices have fallen," she said.

"Electricity customers in the Republic are continuing to get a far better deal than their counterparts in Northern Ireland," she added.

This week is an important one for the electricity industry in Europe, because from Friday markets in 12 EU states will be open to competition, as an EU directive is implemented.

This move is likely to mean falling prices and a series of acquisitions, joint ventures and strategic alliances as companies seek to increase their presence in a single energy market.

The new competition will effect more than 26 per cent of total EU electricity demand. The electricity markets in many EU states, like Britain, are already open to competition. However, the Republic's market does not open to competition until next year, along with Greece. Belgium received a one year dispensation from the EU directive, but has decided to open its market up from this week.