The price of the average residential gas heating bill is set to rise by approximately €190 a year from the start of October, following a decision by the energy regulator yesterday.
In a move described as a "hammer blow to manufacturing" by small business representatives, the Commission for Energy Regulation has said it is planning to approve a 25 per cent increase in the price An Bord Gáis can charge residential and small business customers.
The latest price rise, which is inclusive of VAT, comes at a time when both the VHI and the ESB have recently been granted price rises of 12.5 per cent and 2.5 per cent respectively.
Residential customers have already seen the cost of their home heating bills rise by 20 per cent since April 2003. This followed a price freeze from the mid-1980s until that date. Small commercial and industrial businesses have also witnessed a 25 per cent increase in their gas bills since April 2003.
Bord Gáis, which had originally applied to the energy regulator for a price increase of 34 per cent, said any increase was "naturally regrettable". However, in a market where wholesale prices were now 69 per cent higher than they were a year ago, a rise in prices for customers was "unavoidable".
"The unprecedented rise in UK wholesale gas prices is having a direct impact on energy prices to customers," said Paul Kenny deputy head of energy supply with Bord Gáis. "Even after the increase in October, gas will be some 16 per cent cheaper than oil and 21 per cent cheaper than coal for home heating."
The new gas prices would still be 17 per cent below the current EU residential average, Mr Kenny added.
A spokeswoman for Bord Gáis said the average domestic heating bill is currently approximately €756 a year. The proposed price increase, which would add an extra 52 cents a day on to the average domestic bill, would bring this to approximately €946 - an increase of €190.
It was "unlikely" Shell's Corrib pipeline in Co Mayo would lead to a reduction in the proposed price rise if and when it came on stream, she said.
Outlining the reasons behind its proposed decision, which is subject to a public consultation process, the Commission for Energy Regulation said it was aware Bord Gáis was facing increased costs as a result of record increases in gas prices.
However, Pat Delaney of the Small Firms Association said the proposed rise was "hugely bad news" for his members.
The regulatory body will issue a final decision before September 9th.