Shocking Gas Price Rise

Regulator Approves 34% Hike In October

A shock rise in the price of gas has left Irish consumers with an extra 450 Euro a year to pay in household bills.

The energy regulator has approved a 34% rise in the price of gas from this October.

That followed a 20% increase last October and an 11% increase the year before. Consumers had been warned to expect an increase, but had been led to believe that the hike would be around 20%, just over half of the final increase.

Bord Gáis said that the average annual bill would rise from 902 Euroto more than 1,200 when the increase is introduced from October 1st.

The move has been strongly condemned by business organisations and opposition parties.

Bernard Allen, the Fine Gael spokesman on communications and energy, described it as a "betrayal".

Apart from denting the wallets of private consumers, the move is expected to have a significant impact on small businesses.

Bord Gáis, which provides gas to the vast majority of homes in the Republic, defended the decision.

It said, "unprecedented increases in the price of wholesale natural gas in recent years" had led to the price rise, which it described as "hugely regrettable" but also "completely unavoidable".

The company claimed that, despite the increase, gas price rises in the Republic were below the current EU average.

However separate figures released from the EU show that even before the price hike Ireland's energy costs are 16% above the EU average.

Bord Gais predicted that prices would stabilise because of developments in the UK.

The company has been suffering some financial pressures recently because of the escalation in international fuel prices. Pre-tax profits were down 9 per cent in 2005, although sales were up.

The Consumers Association of Ireland called on the government to look at VAT levels on the household bills and to increase incentives for those who are attempting to use alternative energy sources.

Small Business are expected to be hit hard by the increase.

Irish Small and Medium Enterprise, Chief Executive Mark Fielding said the decision would cause serious problems for many small businesses.

"The increase will add an additional annual cost of 13,000Euro to the costs of a typical, small, medium enterprise," he said.

"Companies will have to increase turnover by 250,000Euro, just to cover the gas increase and break even.

"The only alternative is to pass the cost on or to reduce staff levels, with the latter being the most likely option".

The Small Firms Association also said it was 'shocked' at the decision and predicted that the manufacturing sector, already suffering from increased competition from the low wage economies of the Far East and Eastern Europe, would be badly hit.

The increases are in large part a result of Ireland's high dependence on imported fossil fuels.

A Government Green Paper is due to be published shortly outlining policy responses to this situation, including increased emphasis on bio-fuels.Ireland's dependence on outside energy supplies will lessen if the Corrib gas field off Co Mayo is brought into production.

However development of this has been delayed by protests. There are also plans to build an LNG facility in Shannon.

LNG is a natural gas which is converted to liquid form by cooling to a very low temperature of about minus 162 degrees. At this temperature it can be transported by ship.

The Green Party's energy spokesman, Eamon Ryan TD, said: "The Government must react to this shocking rise in gas prices with a radical new energy programme that will promote renewable energy and energy efficiency".