Small business lobby ISME called the decision a "body blow" for companies, claiming it would mean an additional cost of 13,000 to the average small business.

ISME said the average small business would have to make an additional 250,000 just to pay for the increase.

"Since the advent of the Regulator the price of gas and electricity has increased beyond what even the greatest pessimists could predict. With a stroke of his pen the regulator is in effect signing a death warrant for many smaller businesses who cannot cope with the rising costs. This situation is unsustainable and unacceptable", said Fielding.

The news followed statements by ESB chairman Tadhg O'Donoghue earlier in the week that he expected prices to rise by up to 20% due to rising fuel costs.

Labour Communications, Marine & Natural Resources spokesman Tommy Broughan TD said the price hike would hit the poor hardest.

"Throughout the past year in particular, householders on low incomes have been finding the financial burden of the energy price spiral more and more difficult to bear, " he said.

The severity of the price increase was partly explained by the fact that consumers had previously been cushioned from rising world gas prices by Bord Gais's long-term gas contracts, which have now expired.