Bord Gais Price Increase:

Catalyst Commercial Services Ltd — Fri, 25 Jul 2008 19:06:43 +0000

Householders and businesses face a 20% increase in the price of gas, the energy regulator said today. The Commission for Energy Regulation (CER) said it was “minded to approve” the interim increase which will take effect from September 1st. Prices for 2009 are to be reviewed in the autumn with another possible increase in January. The expected increase is further bad news for householders and small businesses, already suffering rising inflation amid the economic downturn. Electricity bills are to rise by 17.5% on August 1st, the CER said earlier this month. Ireland imports 90 per cent of its gas from the UK, where wholesale prices have doubled in the past 12 months. “Against this background, it is regrettable but inevitable that consumer gas prices will rise significantly for 2008/09,” the CER said in the statement. Bord Gais managing director David Bunworth said the unprecedented volatility of global energy costs had forced it to seek the increases over the coming months. “We understand the impact of such a sizeable price rise for our customers, particularly the more vulnerable, and are currently working with the relevant agencies and the newly formed Government Forum to address the issue of energy affordability,” he said. Today’s move will see €150 added to the average annual bill. The Labour party’s spokeswoman on energy, Liz McManus, called on the Minister for Energy, Eamon Ryan, to develop a strategy to help low-income families deal with escalating costs. “The Government must now accept that fuel poverty is now a major social problem,” she said. “Around 60,000 Irish households live in persistent fuel poverty and a further 160,000 or so experience intermittent fuel poverty. Low income housing, either social or private housing, is generally poorly insulated and inefficient in energy terms. The level of fuel poverty in the private rented sector is almost three times higher than that found among mortgage holders. It exists both in rural and urban settings.” Fine Gael enterprise spokesman Leo Varadkar said today’s news was a “double whammy” for families. “The 20 per cent rise will add 0.2 per cent to the rate of inflation and when taken into account with the recent rises in electricity prices inflation will jump a massive 0.5 per cent,” he said. “Instead of rubber stamping price increases, the regulator should be looking at how energy companies charge customers. For instance, the Irish consumer is forced to pay both investment and maintenance costs for the energy transmission network. This allows generating companies to pay off their capital debts on the back of over-charged consumers.” The Society of St Vincent de Paul said it is “very concerned” at the price rise, and warned it would have the biggest impact on the most vulnerable in the community.

“People on low incomes and dependent on social welfare spend a significantly higher proportion of their income on the basics of life – food and fuel,” it said. “Last year, SVP had to spend over €3.5 million helping people with fuel costs.” It said that the number of calls for help it has received in the Dublin area has risen 44 per cent on last year’s figures, with food and energy as the main issues involved. The organisation called on Bord Gáis not to include the standing charge in their price increase, and asked the Minister for Social and Family Affairs to help tackle the issue of fuel poverty among social welfare recipients.

Age Action called on the Government to ensure older, more vulnerable people would be protected from rising fuel prices. “This increase along with the recent increases in the cost of oil and electricity leaves many older people praying for a mild winter. They know if the winter is hash they will suffer.” Said Eamon Timmins, Age Action. It is calling for the increase in the fuel allowance to €30 per week in the upcoming Budget. Meanwhile, trade union Mandate called for flat rate pay increases, rather than percentage rises, for low-paid workers to help offset the rise in gas and electricity prices, saying such an increase was “essential”. General secretary of the union, John Douglas, said that any pay deal agreed under national wage discussions would have to take account of the rise in fuel and energy prices, saying that its low-paid members were struggling to make ends meet.

“Today’s announcement for a 20 per cent increase in gas prices, coupled with the announcement that electricity prices are to rise by 17.5 per cent will have a devastating effect on low paid workers in particular,” he said.

“A flat rate increase will help in some way towards lifting low earners out of fuel and food poverty whilst also compensating high earners for the increases in the basic necessities.”

Business groups were also expressing their concern at the planned price hikes. Ibec warned that the rapidly rising costs would have an impact on competitiveness in the enterprise sector.

“When trading in a global marketplace, small and open export-dependent economies, such as Ireland, must be extremely sensitive as to the negative impact rising input-costs can have,” said Donal Buckley, Ibec’s head of business infrastructure.

“Companies trading internationally are unable to pass on these increases and, in many instances, are receiving less for their products year on year.”

The Small Firms Association (SFA) condemned the increase. “If we are to accept the rationale outlined by the CER in its decision, then it is clear that the government has monumentally failed on its national energy policy,” said SFA director Patricia Callan.

“Whilst we all accept that energy prices are rising internationally and that this will have a knock-on effect here in Ireland, why is it that we are still so vulnerable to international price movements? Effective regulation of a market has to mean more than continuous prices increases.”

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Bord Gais Price Increase:

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