Gas prices for householders and businesses are likely to rise strongly over the next few years as cheap Bord Gaís supply contracts run out.
Bord Gaís has several legacy gas contracts that have allowed the company to subsidise prices to domestic and commercial customers. But this situation is set to end shortly, warns a new document prepared for the energy regulator, the Commission for Energy Regulation (CER).
"In recent years, the financial benefits associated with legacy gas contracts have effectively provided a major subsidy for domestic and commercial . . . tariffs," states the document. It is estimated that older contracts held by Bord Gaís benefited it to the tune of €100 million.
The document states: "A decline in the value of such benefits is expected from 2006/2007, which would imply that tariffs will become more market reflective going forward".
Legacy contracts are normally older contracts that are priced at below current market rates. Submissions made to the regulator suggest these contracts deliver an advantage to Bord Gaís.
