Electricity prices to be reduced by more than 5%

Householders can look forward to reduced electricity charges this winter as the Commission for Energy Regulation announced yesterday that electricity prices are set to be reduced by more than 5 per cent from November.

Even bigger price cuts have been promised for small and medium-sized business customers.

The energy regulator has said that it is considering reducing residential customers' electricity prices by 5.4 per cent and prices for small businesses by 5.9 per cent.

Medium-sized business customers are expected to benefit even more from the price reductions, with their electricity costs expected to come down by around 10 per cent.

Once the reductions are put in place, residential electricity customers can expect to save an average of €50 on their annual electricity bill.

"This means that customers can expect lower bills throughout the winter period, when electricity usage is highest," a spokesman for the energy regulator said.

The ESB will publish details of the proposed tariffs on September 14th, before the commission's final decision on the actual amount of the reductions is announced in early October.

The energy regulator is citing lower gas prices, offset somewhat by increases in oil and coal prices, as a reason for the drop in electricity supply costs.

The introduction of the single electricity market, a cross-Border scheme that will create aall-island wholesale electricity market in Ireland from November 1st, is seen as another justification for the drop in electricity prices.

"The single electricity market introduces new trading rules and mechanisms for electricity generators and suppliers and has been designed to encourage the continued growth of competition in the electricity sector," the energy regulator's spokesman said.

The electricity price cuts come just one week after the energy regulator confirmed that more than 500,000 households would benefit from a fall in gas prices that would be worth €100 annually to customers.

Bernard Durkan, Fine Gael spokesman on communications and natural resources, welcomed the energy regulator's announcement, saying that electricity price cuts were "justified" and "overdue".

"While this announcement is welcome, it is such a pity that it took so long for the lower market prices that the ESB has been paying to be passed on to the hard-pressed consumer.

"Price increases granted last year were indefensible as gas prices had fallen on international markets and there was a consequent knock-on benefits for electricity markets. It is only right and proper, if belated, that these increases have been reversed," Mr Durkan said.

Electricity reductions are expected to be implemented on November 1st, two months earlier than usual, to coincide with the beginning of the single electricity market.

The single electricity market is the first of its kind in the European Union and is seen as a flagship development in the European drive towards a common energy market.