Energy regulator Tom Reeves is considering ending all regulation of electricity prices for major industrial customers.

In a document circulated among energy companies Mr Reeves states that he is considering removing tariff regulation from the market segment dominated by major industrial users.

These users consume about 30 per cent of electricity output. Among this group would be large industrial users like Intel and some of the State's largest shopping centres and factories.

Mr Reeves claims the level of competition is such that regulation may no longer be needed. The document also claims that prices in this segment are now reflective of market costs.

At present Mr Reeves regulates the prices of the ESB as the public electricity supplier. The main players in this segment are: Energia, the sales arm of Viridian; Airtricity; ESB Independent Energy; and Bord Gáis.

It is difficult to assess what the end of regulation might mean for these companies. Up to now the tariff agreed for ESB effectively became the benchmark price for the whole segment, but this will not be the case if Mr Reeves goes ahead with the change.

The Commission for Energy Regulation, led by Mr Reeves, said yesterday that regulation of tariffs might also come to an end in other segments of the market, but only if strong competition is present. This is not fully the case yet among SMEs and in the household sector there is virtually no competition at all. Mr Reeves has asked for the views of interested parties on the changes.

Mr Reeves is also proposing to introduce what he calls a fuel variation adjustment. This means that bi-monthly bills for all users would move up or down according to worldwide fuel market indices. At present, changes in fuel costs are accounted for on an annual basis.

But Mr Reeves is trying to design a system where consumers can benefit if fuel prices stabilise. He is also studying the idea of adjusting bills on a bi-monthly basis based on changes in the cost of carbon credits. These must be bought by electricity generators who are responsible for carbon emissions.

On an adjustable fuel charge Mr Reeves states: "Tariffs would thus track real fuel costs and avoid large over or under recoveries on the part of ESB power generation at the year end."

However, the document notes one central problem with this idea. "In particular, there would be a lack of certainty for customers concerning the prices they would see month on month." The idea of adjusting tariffs to take account of movements in price is not new and was applied to all ESB retail tariffs in Ireland between 1973 and 1982 to manage the consequences of the oil crisis.