The increase in energy prices sanctioned by the Commission for Energy Regulation, while not unexpected, has resulted in considerable annoyance among domestic and industrial energy-users. The increases will hit households hard, especially among lower-income consumers and they can be relied upon to fuel inflation and undermine our already shaky competitivness.
Just last week, the Central Statistics Office pointed out that three-fifths of current inflation is due to price increases for energy along with utility and local authority charges. Energy, with an increase of 12.5 per cent, was the greatest contributor. The commission has given the go-ahead for an increase of 3.1 per cent in the price of domestic electricity from January 1st. Business will get hit harder with small and medium enterprises looking at a 5.2 per cent rise and large industrial users on the receiving end of a price hike of 8 per cent.
The commission's decision to give Bord Gáis a price increase of 25.26 per cent, while significantly less than the 34 per cent increase sought, will be a major disappointment to gas consumers. The company was quick to point out that residential gas prices in the Republic will still be 17 per cent below the EU average but that will be of little comfort to households next month when they see their bill climb by a quarter.
The reason for the scale of the increase is, we are told, due to the unprecedented rise in the price of wholesale gas in the UK, up by 60 per cent in the last year. Does the company not negotiate long-term supply contracts ending at different intervals so that its customers can be spared through-the-roof price hikes? The Economic and Social Research Institute has determined that our economy is overly dependent on oil and natural gas. The downside of that dependency is showing through with a vengeance.
Energy is a vital component in the quality of life for the people of this State and for economic growth. Is it too much to expect that the government could frame a coherent long-term energy policy which would reduce dependence of imported fuels and which might stimulate competition to a level where customers would benefit? Deregulation of the electricity markets in other countries, notably the UK, resulted in a sharp drop in electricity prices. It is doing the opposite in this State largely because of the continuing dominance of the ESB. Until the government addresses that dominance electricity prices will remain higher than necessary but fear of the ESB trade unions would seem to count for more than fair play for consumers.