An Post's application for a 25 per cent price rise has been rejected by the regulator ComReg.
The State-owned postal firm was seeking a rise in the cost of a standard letter to 60 cent from 48 cent, but ComReg said there was insufficient evidence to support the claim. An Post was granted a rise for large envelopes - from 60 cent to 90 cent - while packets will rise from 96 cent to €2.
Meanwhile, ComReg yesterday said it intended to appoint a team of accountants or consultants to examine An Post's operations in further detail. This team will focus on "revenue identification, volume measurement and cost allocation procedures" at the company.
ComReg issued a preliminary assessment on the application during the summer but it has now delivered its final position. It is not clear whether An Post may legally challenge the decision.
An Post claims a price rise was an integral part of a rescue plan it announced two years ago.
The price changes announced yesterday will not come into effect for three months in order to facilitate customers, ComReg said yesterday.
It gave various reasons for its decision, including a concern that a price rise could actually reduce the number of people using the mail system.
It also pointed out that An Post was facing a new era of competition and it was important for the company to prepare for this. It claimed that An Post would recover 85 per cent of the extra revenue it was seeking via the price increase for large envelopes and packets.
An Post last night reacted angrily to the decision and said its full implications would be studied at a board meeting tomorrow.
A statement said: "This decision is inexplicable and unfair, given the fact that the company has had only one price increase in the past 14 years and that ComReg is fully aware of the financial losses being incurred by An Post on its universal service obligation.
"While An Post welcomes the decision to grant increases in rates for larger and bulkier items, this is overshadowed by the serious financial implications of ComReg's failure to grant an increase in the basic domestic postal rate."
ISME, the small business organisation, said the decision on large envelopes and packets would add greatly to the postal of costs of many small businesses.
"This Scrooge-like decision, so close to Christmas, which was announced under the cover of darkness late this evening, is an attempt to mask the inefficiencies within An Post and will, once again, be used to cover the increased costs to the company as a consequence of the short-sighted agreement with the Communications Workers Union," its statement said.
