Electricity customers face a price hike at the end of the year, just 15 months after tariffs rose for the first time since 1993.

The electricity regulator, Mr Tom Reeves, said in a statement that new rates would be sanctioned in September and charged at the beginning of January 2003.

A review of tariffs has begun and while the regulator's office did not say domestic prices would rise, two informed sources predicted they would.

Electricity has only a marginal impact on inflation but such increases indicate that domestic consumers will have made no gains from the partial liberalisation of the sector.

In theory at least, deregulation is designed to stimulate competition leading to reduced tariffs.

But only one large-scale competitor in the power generation business has emerged while other potential investors have walked away from the market.

In addition, prices are on an upward curve. Domestic tariffs rose by 8.9 per cent last October after eight years of stable prices.

One informed source said a similar increase was very likely to be granted when Mr Reeves made his determination in September.

The average two-monthly domestic electricity bill rose by €7.24 to €89.77 under the increase last year.

If a similar increase was imposed next January, such a bill would rise by €7.99 to €97.76.

The ESB and other operators have claimed that prices were not cost-reflective, particularly when taken in the context of rising fuel costs.

The failure of large-scale investment to materialise has also been attributed to "low" prices.

It emerged last year that the ESB wanted to increase the price of electricity by more than 20 per cent over five years.

The company indicated then that such increases were required to meet rising costs.

The company projected the cost of power generation, which accounts for 55 per cent of tariffs, to rise by €173.99 million in 2000 and 2001.

Fuel cost increases have moderated in recent months.

But the ESB's cost base has been stimulated further by a 21 per cent pay increase for staff, over and above pay rises linked to the Programme for Prosperity and Fairness.

In addition, the company argued last year that domestic customers were cross-subsidised from its business with commercial users of power.

A review process initiated by Mr Reeves's office two months ago is expected to "rebalance" the rates paid by all customers.

Sources said that the increase last October did little to rebalance the rates.

If rebalancing is implemented, this indicates that increases are likely, independent of a fuel-linked rise.

It is thought that the review process will lead to the introduction of a system which will increase tariffs as fuel costs rise and decrease them if the price of fuel falls.

However, a source said that no mechanism had yet been agreed between the regulator and the ESB by which the price of a basket of fuel could be measured.

Such an agreement is crucial, but would be difficult to establish.