Why aren’t our energy prices falling?

A reader called Davide wrote to us after noticing that wholesale energy prices have “dropped by about 85 per cent since their peak in June last year [but] the prices for gas and electricity in Ireland remained untouched”.

He continues: “I am Italian and I keep in touch with the Italian news and I know that prices applied to customers there went down by as much as 50 per cent for gas and electricity about a month and a half ago and they are about to drop again.

“A further 20 per cent for electricity and 10 per cent cut for gas will be applied to retail prices.

“I have contacted my energy supplier requesting an explanation on why the prices were not going down and they refused to answer my questions. They redirected me to the CRU however, as they do not have the authority to regulate prices, they couldn’t assist with my complaint.

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“So far I have noticed that not a single energy supplier in Ireland has dropped their prices which makes me think that the energy companies have a sort of an agreement to keep them up and ‘milk’ their customers. Wholesale prices started dropping drastically since mid/end of December 2022 and I am shocked to see that four months later there is no reflection on retail prices for Irish customers.”

He says he is flagging this issue “as I believe it is a subject that requires an investigation and requires the Irish public to know what is the situation with this matter”.

By coincidence, we received his mail shortly before our colleague Barry O’Halloran addressed this very issue in the pages of The Irish Times.

Under a headline which read – “Electricity suppliers tight-lipped on potential cuts to bills despite falling prices” – O’Halloran detailed how the “leading Irish energy suppliers are not saying if they plan to cut household charges, which have trebled since 2021 to about 44 cent a kilowatt hour, the unit in which electricity is sold”.

Bord Gáis Energy said any “downward fluctuation” in wholesale energy prices would not be reflected in customer prices for some time, as it bought electricity and gas 18 to 24 months in advance of selling it to households.

Electric Ireland noted that it had not increased prices since October last year and had given €50 credit to each residential customer in December, at a cost of €55 million.

SSE Airtricity argued that wholesale prices still exceeded their pre-crisis levels and spiked at more than 1,000 per cent of this over the last year, demonstrating the role suppliers play in protecting families from volatility.

O’Halloran also noted that credit agency Moody’s had “reported that the EU was expected to end March with record-high gas storage for the time of year”.

Fast forward a week and there is still no sign of any price cuts for domestic users of gas and electricity. It is hard to imagine the suppliers will be able to maintain their sky-high prices for much longer.