Businesses could be hit with two fuel-related price increases next week as the energy regulator, Mr Tom Reeves, moves to grant rises to ESB and Bord Gáis.

Mr Reeves is expected to confirm an earlier draft decision to grant the ESB an 8 per cent rise due to the escalating cost of oil and other fossil fuels.

The ESB is also looking for an additional 4.5 per cent to kick in from January, but it is unlikely Mr Reeves will make a decision on this next week.

Mr Reeves is also close to announcing a decision on Bord Gáis tariffs.

Speculation last night was that a price rise of between 10 and 20 per cent could be on the cards. Bord Gáis, like the ESB, has been hit by rising world fuel prices. While the company still relies on older, cheaper gas, increasingly it has to buy at market rates and this is adding to its costs.

The company is also spending large sums upgrading its natural gas network.

In a paper issued in May, Mr Reeves warned that gas prices were set to rise significantly because long-term favourable gas contracts held by Bord Gáis would lapse in the coming years.

Mr Reeves, in a consultation paper issued to the energy industry, warned that Bord Gáis made favourable purchasing deals over the last decade, but these were due to run out and gas would have to be bought at market rates.

He said this would affect what is known as the "franchise market", often referred to as the domestic market.

He said: "Over time, Bord Gáis's costs will approach market costs and, as a result, it is likely that there will be an upward pressure on natural gas supply prices, particularly in the franchise market".

Gas prices are traditionally linked to oil prices, although there can be a small time-lag. Sources in the gas industry suggest price rises of up to 20 per cent could be introduced, although Bord Gáis has said previously it is determined to keep prices as low as possible.

Last year, a price rise of 9.5 per cent was granted after many years without any increase. Mr Reeves also warned a few months ago that any cross-subsidisation between different customer categories could not be permitted because it would distort and hamper competition.

In July, Mr Reeves said he intended to approve a controversial 8 per cent rise in ESB prices due to the escalating cost of oil and other fossil fuels.

This was described as a draft decision. Confirmation would impact on virtually all households. It is understood the average household bill (over two months) comes to €106.65. Based on an 8 per cent increase, this will add approximately €8.50 to each bill.

In July, Mr Reeves explained the background to his decision. "The proposal to approve an increase in electricity prices by 8 per cent next October is due exclusively to the current very high fossil-fuel prices and the forward market prices from publicly available indices," he explained.

While the rise is likely to prove deeply unpopular with businesses and consumer groups, further ESB price rises look increasingly likely, with ESB strongly pushing for a 4.5 per cent increase to kick in at the start of 2005.

This week ISME, the small business group, strongly criticised the likely increases and said its members regarded energy costs as one of their highest overheads.

An announcement will be made in the middle of next week, although it is not clear at this stage whether the ESB and Bord Gáis announcements will be made together.