The ESB's demand that an 8 per cent price rise should begin as soon as September looks set to be rejected by energy regulator Mr Tom Reeves.
It is understood Mr Reeves will inform the company shortly that he cannot sanction an increase in September and that more time will be needed to study the company's costings. Interested parties have until July 30th to make submissions to Mr Reeves on the price application.
This would represent a blow for the ESB, which is anxious to see the price increase phased in as soon as possible. The company estimates that rising fuel costs have created an additional €195 million in costs.
The ESB last week told the Commission for Energy Regulation, headed by Mr Reeves, that it wants an 8 per cent rise in September and a 4.5 per cent increase from January 2005.
The company has pointed to escalating fuel costs as the reason for the price application. It points out that 50 per cent of the cost of generating electricity comes from fuel.
In the submission the ESB states: "While customers will understandably be very unhappy with a high price increase following the increases in recent years, security of supply is dependent on the viability of the existing generators, combined with the entry of new capacity into the market and this is undermined if prices are not cost reflective."
Mr Reeves is expected to write to the ESB telling the company that extensive preparatory work needs to be done before any price rise can be sanctioned and this can often take several momths.
Mr Reeves has declined to express a view at this stage on the ESB's figures, however. The 8 per cent and 4.5 per cent increases have prompted strong reaction from business groups, with ISME describing them as a potential "killer blow" to small business.
Mr Reeves will this week release details of a new mechanism designed to deliver benefits to electricity comsumers when fuel prices fall.
Mr Reeves is determined to ensure that consumers benefit when fuel prices fall, not just lose out when they rise.
However, the outlook for oil prices is not too promising for 2005, with OPEC predicting rising demand. Gas and coal prices closely follow the pattern of oil on world markets.
Nevertheless, under a new "fuel variation" mechanism,changes in the cost of fuel to the ESB will be reflected in bi-monthly bills to householders. While oil, gas and coal prices are prone to significant volatility, the regulator is determined that regular bills to householders more accurately reflect the international trends.
ISME has already called on the Minister for Natural Resources, Mr Ahern, to step in and stop any increases.
The Minister has declined to take such action, although his spokesman has said any increase should take account of national competitiveness.
