BUSINESS and consumer groups have condemned the Government's decision to approve electricity price increases of about 7 per cent during the next three years. Average increases of 2 per cent will be introduced from April if restructuring talks between the company and its unions conclude on schedule.
Householders face price rises of 2.8 per cent, which will add 17p a week to the average ESB household bill, the company said yesterday.
They can expect increases above the average, as the energy market is deregulated and pricing strategy is geared to keep down the costs of industry and commercial firms.
Traditionally business and industry have subsidised domestic consumers. The company says that because of the 10 year price freeze on ESB charges, the real cost to domestic consumers is around 33 per cent less now than it was in 1986.
The increases have been expected for some time. The Government formally sanctioned them yesterday after tripartite talks involving the Department of Transport, Energy and Communications, ESB management and the ESB unions finalised discussions on pricing policy.
These talks are part of the Cost and Competitiveness Review (CCR) aimed at making the ESB viable in the competitive energy market which comes into operation in 1998. If the talks break down, pricing policy will be reviewed and stiffer increases would probably follow.
While a number of other matters remain to be resolved, the CCR negotiations are expected to conclude next week, in which case the ESB unions will ballot members on the overall package by the end of next month.
The ESB defends the increases on the basis that they are the first in 10 years, that they are needed to help meet restructuring and renovation costs (including a £210 million redundancy package for 2,000 staff), and that the new rates will still leave electricity prices in the Republic much lower than in most other EU states.
Assuming the CCR keeps on schedule, domestic users will pay an extra 2.8 per cent starting in the April/May billing period. A further 2 per cent increase will follow 12 months later.
Industry will face increases of 2 per cent this year and 1.5 per cent in 1997. The ESB says these rises acre below projected rates of inflation, that the vast majority of small firms will incur no increase and "many will see reductions in their electricity bills".
In 1998 prices will rise by an average of 3 per cent. In a more commercially driven environment, domestic users can expect: to bear the burden of price rises.
The Consumers Association, called on the Government to protect consumers from unjustified price increases. It claimed the ESB was looking for a 12 per cent increase for domestic users. The company should be able to absorb increased costs from the rapid growth in the energy market.
Ms Rosemary Steen, of the Irish Business and Employers Confederation, said the new price structure contained no significant rebalancing of tariffs between domestic and industrial consumers.
Referring to the restructuring talks with the unions, she said: "It is extremely disappointing that a programme of cost reductions at the ESB has resulted in a net price increase for consumers." This would have a negative impact on industrial competitiveness, she warned.
The director of the Food, Drink and Tobacco Federation, Mr Ciaran Fitzgerald, said the increases made it even more imperative for the Government to reduce employers' PRSI in companies competing directly with British firms.
Although British energy prices were higher on average, many large firms could buy electricity much more cheaply because of deregulation.
Mr Brendan Butler, of the Small Firms Association, said that key indigenous manufacturers would face increases of 2 per cent. This could mark the "final nail in the coffin" for some firms relying on the UK market.