Gas prices set to rise again
The was more bad news for Irish consumers today as Bord Gáis Energy announced that it has applied to the Commission for Energy Regulation (CER) for a 7.54 per cent rise in its residential gas tariffs from October.
The price increase is being sought despite a fall in the wholesale price of gas on international markets in recent months but the company insisted it was unavoidable.
Bord Gáis Energy is the only company to have its prices controlled by the CER and the increase, if granted, will add around €60 on to the average household's annual gas bill. It comes after the company was granted a 22 per cent increase in residential gas prices this time last year.
The cumulative impact of the two increases will see the average bill go up from about €700 a year to close to €1,000 in just 12 months. The company has defended the price increases by insisting that domestic gas prices in the Republic are still below the EU average.
The CER published a public consultation paper on the gas price increase today and it is almost certain to confirm it in early September.
Bord Gáis Energy said the increase was beyond its control because a weak euro had seen its costs spike while it was also paying more in gas network tariffs.
Gas prices have fallen slightly on world markets in recent weeks, but the prices Bord Gáis Energy has had to pay have increased because the value of the euro has decreased considerably over the last year. It buys virtually all of its gas from Britain and is required to pay in sterling.
The upward pressure on network tariffs is due to a reduction in gas demand and higher financing costs for Bord Gáis Networks, both of which are related to the recession at home and abroad. The CER assured consumers it would only allow "efficiently-incurred costs from BG Energy to be passed through to customers".
It said that if the gas price rise is granted "it would be with regret given the current difficult economic climate".
It pointed out, however, that there had been significant gas price rises across many EU countries over the last two years and that Eurostat data shows Ireland's residential gas prices are generally lower than the EU average.
"We expect Ireland's gas prices to remain relatively competitive, even if an increase is decided on for this October," the CER said in a statement. It also encouraged consumers to shop-around for the best tariff and service deal.
Bord Gáis Energy said it has "worked hard to keep the increase to a minimum but has no control over either wholesale prices or networks charges, which account collectively for 90 per cent of the total costs of supply".