BUSINESS ORGANISATIONS and Opposition parties have reacted furiously to the energy regulator's decision to grant the ESB an interim electricity price increase of 17.5 per cent from August 1st.
The Commission for Energy Regulation has also signalled that a second price rise is highly likely in January.
The director of the Small Firms Association, Patricia Callan, said the price hike was completely unacceptable to the small business community.
"Three weeks notice that a major input cost is going to increase by such a large amount is ridiculous," she said.
"Energy is complementary to the rest of the economy. A failure to supply energy at competitive prices adds costs to businesses operating in Ireland, with consequential effects on business competitiveness. It is incredible that at a time when every economic report on the Irish economy stresses the need to reduce costs, increase productivity and regain competitiveness, Irish businesses are again being undermined in this way."
Irish consumers may well be facing further price hikes, with Bord Gais seeking a price hike of 17 - 19 per cent later this year.
Fine Gael's energy spokesman, Simon Coveney said the price rise would add a further quarter of a per cent to the rate of inflation.
"Electricity costs in Ireland are already among the highest in Europe for domestic and business customers and the regulator, instead of sanctioning this massive increase, should be pressing the ESB to improve internal efficiencies, as has been previously recommended by a Deloitte review," he said.
Isme chief executive Mark Fielding described it as another example of the failure of regulation to help business in Ireland.
"It's just another nail in the coffin of small businesses at a time when they are struggling," he said.
Head of policy at Chambers Ireland Seán Murphy said it highlighted the need for Ireland to develop its own energy sources through renewables and natural gas.
"It underpins the urgency and need to get the gas ashore at Bellanaboy and into the Irish energy processing system to mitigate our reliance on fluctuating international energy markets," he said.
With global energy prices continuing to rise, a spokesman for the regulator said that a second substantial hike in electricity prices is very likely next January.
A rebate of €300 million to electricity customers, requested by the regulator and agreed by the ESB, will apply from January 1st, 2009 and will offset the second phase increase by 8 -10 per cent.
