THE government has confirmed it is likely to increase household electricity prices this October so it can reduce bills for large industrial customers after months of speculation within the energy industry.

The move comes despite evidence that an increasing num­ber of consumers are struggling to pay their bills.

Energy minister Eamon Ryan plans to increase the prices using network charges, which mean that all consumers will be hit, regardless of their supplier. A similar measure is also understood to be being considered for gas customers.

A spokeswoman for the minister said that the move was designed to restore the competitiveness of Irish industry.

"Protecting jobs and economic activity is in the interest of every consumer and every citizen as Ireland's industrial electricity prices tend to be above average when compared with other EU member states as a result of a variety of factors," she said.

Although the government's plan has to pass through a public consultation process, the increase is seen as a done deal by many within the industry.

ESB chief executive Padraig McManus told the Sunday Tribune he suspected that even if the increase didn't come this year, it was likely for 2011. He added that the ESB and other suppliers had little influence over the timing and extent of such a measure.

"The minister's interest [will be] to ensure that the employment sector gets the best benefit in terms of any rebalancing [adjustment] of the electricity tariff," he said.

McManus said the move was inevitable, revealing that the ESB would have spent almost €750m in the two years to October 2010 subsidising industrial electricity prices to keep them in line with the rest of Europe.

This subsidy, which is believed to have been ordered by Ryan, cannot be sustained as the ESB has also been instructed to secure a foothold in the British market in advance of the construction of the interconnector between Britain and Ireland.

Bord Gáis admitted last week that disconnections increased by 15% last year and while the ESB declined to provide similar figures, industry sources believe it has experienced a significant number of direct-debit cancellations from householders who are unable to maintain a sufficient bank balance.

But Ryan's spokeswoman only committed the government to "mitigating the impact of energy costs for vulnerable households through a combination of institutional supports, structural energy efficiency improvements to houses and advice for consumers".