The levels of gas and electricity prices rises announced earlier this year have been reduced, the Commission for Energy Regulation (CER) announced today.
Earlier this year, the CER granted Bord Gáis a 34 per cent increase due to a sharp rise in wholesale prices. ESB, which faced increased costs for fuelling its power plants, was granted an increase of almost 20 per cent.
However, with prices on world markets falling, the CER today revised the increase in tarriffs downwards.
It estimated the value of the reduction for the typical domestic gas user would be worth around €125 per year after reducing the increase to 24 per cent. The new price takes effect from the beginning of February 2007.
A spokesman for the CER said: "The main driver of this decision to amend the previously approved prices downwards has been the significant and consistent reduction in fuel prices on the international markets where both ESB and BGE purchase their fuels."
David Bunworth, head of Bord Gáis energy supply said that natural gas prices are already below the EU average and that following the price reduction, customers will be paying 15 per cent less than their European neighbours.
The ESB price increase was reduced by 7.1 per cent to 12.6 per cent from January 1st next. The regulator estimated the average household bill would benefit by around €60.
Noel Dempsey Minister for Natural Resources welcomed the CER decision.
The proposed electricity price increases will be reduced by 7.1 per cent on average from the 1st of January 2007 and the proposed gas increases by 10 per cent from 1st February 2007. He said the recent fall in prices gas, oil and coal was a positive development in a volatile market.
He also welcomed the CER's plan for public consultation on a reassessment of the fuel cost variation mechanisms used to establish tarriffs.
Fine Gael's Bernard Durkan said the announcement was "climb down" which indicated a "serious error of judgement by the Government and its trust in the regulatory system"
"The approval for these massive price hikes, granted by the Regulator, was irresponsible particularly at a time when international energy price indicators were on a downward trend, Mr Durkan said.
Labour energy spokesman Tommy Broughan the price increases illustrate the "lack of consistency and transparency in aspects of CER's pricing policy that must be urgently addressed".
While welcoming the cut in price increases, he warned that price would still be a blow to both domestic users and and commercial users.
"Increases of almost 13 per cent in electricity prices and almost 24 per cent in the revised gas tariff from February 2007 are still penal impositions on hard pressed households and businesses," Mr Broughan said.
Business and employers' group Ibec said the revised increases should be the first step in bringing energy prices into line with other countries.
Ibec energy executive David Manning said: "Irish business has been hit by crippling energy price hikes in recent years.
Meanwhile, a report launched by independent transmission system operator, EirGrid, found electricity demand is expected to grow strongly at a rate of 4.1% a year.
EirGrid said new generation facilities would be needed with the closure of 1,300 megawatts of older power plants.
"Opportunities will arise to develop a more competitive, environmentally friendly and sustainable system. However, maintaining normal security of supply standards may be difficult through this period unless capacity withdrawal is managed carefully," the report stated.
Additional reporting PA