Consumers face major hike in ESB and gas bills

CONSUMERS ARE facing a substantial hike in energy costs next year as fuel prices hit suppliers such as the ESB and Bord Gáis.

Sources at both companies acknowledged yesterday that such cost increases were "inevitable" in light of rising oil and natural gas prices on world markets. Neither could say by how much prices for householders would increase, but Bord Gáis is expected to give some indication when it publishes its 2007 results tomorrow.

British natural gas supplier, Centrica, said yesterday that it intended to increase its charges, as high wholesale prices were squeezing its profits. Centrica could hike its prices by as much as 20 per cent. Industry sources said yesterday that, as the same cost pressures apply here, Bord Gáis could seek permission from the Commission for Energy Regulation (CER) to impose a similar increase.

The ESB's power plants, which supply about 1.7 million households in the Republic, largely depend on fossil fuels such as natural gas and coal to generate electricity. Fuel is the company's single biggest cost, and increasing oil prices mean that generating electricity is getting more expensive.

The CER, headed by Tom Reeves, determines the price that householders pay for both gas and electricity. The ESB and Bord Gáis have to make submissions to the regulator in July seeking permission to cut or raise domestic charges for 2009. The regulator will then set the charges.

As oil and gas prices fell last year, the CER allowed both Bord Gáis and the ESB to cut their domestic charges for 2008. This resulted in savings of €100 a year on the average gas bill and €50 on electricity costs. However, oil has hit a record $126 a barrel, while natural gas prices yesterday hit a record 86.5 pence per unit in London.