Bord Gáis wants a two-step increase in gas prices beginning next year.

The State company told the energy regulator, Mr Tom Reeves, in September that it wanted an overall average rise of 27 per cent in domestic and industrial gas prices.

The company has also indicated to Mr Reeves's office that it would accept a two-step rise.

There are conflicting accounts as to whether the company sought the two-step rise in September or subsequently.

Certain sources claim that the company initially sought the full 27 per cent rise and only later indicated that it would accept a phased increase. Others said a phased increase was always on the agenda.

Either way, the company is thought to be seeking a 14 per cent increase as soon as practicable. If granted, such a rise would add €13.72 to the average bi-monthly domestic gas bill of €98.

Any such increase for up to 400,000 domestic customers would feed into the inflation rate, which is higher in the Republic than anywhere else in the euro zone.

It would follow a slew of price increases for electricity and public transport, among other services.

Mr Reeves is not expected to issue a direction on tariffs until at least the spring. His office is believed to be conducting a detailed review of data supplied by Bord Gáis.

A company spokesman said it would be inappropriate to comment as the determination on prices was a matter for Mr Reeves.

The regulator's spokesman would say only that the office was assessing the application for a price rise.

In his latest quarterly bulletin, Mr Reeves said the company was seeking an increase in tariffs to all end-users of gas because it was facing higher gas procurement and transportation costs.

In addition, he noted that certain tariffs had not increased for a significant period.

It is understood Bord Gáis claims its increase is justified because the price of gas to residential customers has not increased in the past 15 years, owing to an effective price freeze.

The company is understood to have stated that it will honour fully the existing price freeze, which ends in 2003.

Allowing for inflation, Bord Gáis is understood to claim that the actual price of gas has fallen and is effectively 35-40 per cent cheaper than 15 years ago.

The company argues that the commodity price for gas, the largest single factor affecting residential price, increased by more than 100 per cent between 1999 and 2002.