ESB says domestic electricity bills may fall by up to 10%

Electricity prices are set to fall later this year and the ESB believes that it should be possible to cut household bills by up to 10 per cent, or €14 on average.

The Commission for Energy Regulation (CER), which sets the price that the ESB can charge householders, said yesterday these charges could fall as a result of its annual review in November. Its spokesman said a final decision on a price reduction had yet to be made. "We are hopeful, but we don't know by how much yet," he said.

He was responding to a statement from ESB chairman Tadhg O'Donoghue that the company could immediately cut prices by 5 per cent, or take €7.05 off the average household bill of €143, if it were allowed to do so.

The CER sets the price that the ESB can charge households for electricity once each year. The ESB is not allowed to increase or cut its prices unless a review occurs. Mr O'Donoghue said if it could, the ESB would cut prices by up to 10 per cent over the next year. A 10 per cent cut would result in a fall of €85.80 a year, or €14.30 on the average bill.

Mr O'Donoghue said he had no difficulty with the CER setting a maximum price, but argued it should be allowed to charge less if market conditions allowed this.

"We should be able to cut the prices we charge our 1.9 million domestic users if we can do so," he said.

The ESB can supply electricity more cheaply because the price it pays for gas and coal has fallen since the CER allowed a 12.6 per cent price rise at the start of 2007.

The CER's spokesman said its pricing policies have to take into account the "longer-term view that the market is allowed to develop" by encouraging the ESB's competitors, who do not supply the domestic market.

This approach has led to accusations from a number of groups, including the Irish Congress of Trade Unions, that the CER is keeping prices higher than they need be to attract competition.

The regulator argues that the ESB's competitors, and a subsidiary of the State company, ESB Independent Energy (ESBIE), can supply domestic electricity at below the rate it sets. However, none of the ESB's competitors plans to enter the domestic market. Wind energy group Airtricity will supply domestic users who approach it, but will charge the same as the ESB.

Airtricity and the other main player, Energia, are focused on supplying businesses and industry and ESBIE operates in the same market.

An ESB spokesman pointed out that ESBIE buys electricity from its parent and other suppliers. "It wouldn't necessarily have the power [ electricity] to supply the domestic market," he said.