BUSINESS and domestic users will pay more for electricity from next month, the ESB said yesterday. But prices will remain significantly lower than the European average. Meanwhile, Northern Ireland Electricity was told to cut its prices reducing its revenues by 25 per cent.
The ESB said it needed the increase to help pay for a £1 billion investment in infrastructure over the next five years. The move is the second phase of a three year price package agreed between management, trades unions and the Department of Transport, Energy and Communications last December.
The latest increase, an average of 1.5 per cent, comes one year after a 2 per cent increase. Next year, the company plans a further increase of 3 per cent.
This in turn forms part of the company's Cost and Competitiveness Review, which will reduce costs by £58 million per annum. The ESB said it spent £157 million last year and intends to invest a further £850 million modernising its network.
Much of the Republic's electric infrastructure dates to the rural electrification schemes of the 1950s and 1960s, an ESB spokesman said yesterday. The system requires four times as much distance of lines per customer than the average industrial economy, he said.
The price increase will see domestic ESB bills rising by 2 per cent an average of 12.5p per week - while commercial rates go up by per cent and industrial users will pay 1.5 per cent more.
IBEC, the employers lobby, said it was disappointed at the rise in the price of electricity for business, but welcomed the small size of the increase.
"Even after this increase, constant efficiencies in the operation of the ESB mean that the price of electricity in Ireland is still 30 per cent lower in real terms than it was 10 years ago," the ESB said.
"Domestic electricity prices in Ireland are currently 20 per cent lower than the European average.
"Following this price increase, ESB's domestic price will be approximately 17 per cent lower and ESB's industrial price will be approximately 10 per cent lower than those in Northern Ireland," the company added.
In a separate development, Northern Ireland Electricity (NIE) yesterday welcomed a report on its pricing by Britain's Monopolies and Mergers Commission. The report calls for a one off 25 per cent cut in revenues this year, more lenient than the 31 per cent its official regulator, Ofreg, had proposed.
Observers said the fact that the MCC decision was now out of the way would fuel further speculation that British electricity companies are planning to buy NIE.
"The MMC agreed with much of NIE's case and rejected (Ofreg's) proposals. It is not now open to (Ofreg) to reject the MMC's conclusions and we shall resist any attempt on his part to do so," NIE said in a statement.
Ofreg published the MMC report and said it would "largely accept" its proposals, which said revenues allowed by price formulas should be cut by 25 per cent for 1997-98 and by two per cent below inflation annually for the following four years.
The MMC said that on the basis of its assessments, NIE should see revenues of £575 million sterling from its transmission and distribution business at 1996-97 prices.
