Consumers warned to expect further energy price hikes in coming weeks

Consumers are being warned to expect further gas and electricity price hikes over the coming weeks as the war in Ukraine and international supply shortages push energy costs to historic highs.

On Friday, SSE Airtricity said it would increase gas and electricity prices by 39 per cent and 35.4 per cent respectively from October 1st, a move which will impact about 250,000 electricity customers and 85,000 gas customers.

The increase will add almost €600 a year to the average customer’s electricity bill and more than €500 a year to their gas bill. The company introduced a similar increase just last May.

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[ SSE Airtricity raises electricity prices by 35.4% and gas by 39% ]

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The Department of the Environment and Climate Action, which has responsibility for energy, is in constant communication with the energy companies and Minister Eamon Ryan and other senior Government figures were given advance warning of Friday’s price hikes.

Sources briefed on the issue said on Friday night that further price increases are expected, with one senior Government politician admitting that the spiralling cost of energy was now the Coalition’s single biggest priority as it faced into the autumn and winter.

“This isn’t a surprise,” said one Government figure, “and there’s going to be more of it.”

Ministers and senior officials said that the budget, to be delivered in less than four weeks on September 27th, would contain measures to alleviate the effects of the price rises. When pressed, one senior decision-maker said these would be along the lines of the previous measures, which included VAT reductions, welfare increases and direct credits.

It is understood that the budget is also likely to include supports for businesses affected by higher energy prices.

The Green Party is pushing for a windfall tax to be imposed on energy companies, and the proposal is currently being examined by the Department of Finance and the Revenue Commissioners.

Green TD Steven Matthews said: “I think this budget is the time to do it.” He said energy bills were increasing and “people are noticing them but as we start getting into the darker, colder winter that’s going to become even more pronounced”.

Party chairwoman Pauline O’Reilly criticised energy companies for increasing their prices “at a time when people are struggling”.

However, Government sources stressed that the windfall tax had not been agreed by Fianna Fáil and Fine Gael, while there is understood to be some opposition in the Department of Finance to the move.

A spokesman for the department said: “Some energy companies operating in Ireland are owned by the State and a change in dividend policy could be more effective in amending the amount recouped by these companies.”

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People Before Profit TD Paul Murphy criticised the latest price increases for “hard-pressed households”, saying it “underlines the need for the Government to bring in price controls immediately”.

He said PBP was also calling for a 50 per cent windfall tax on energy companies, which he said could raise €300 million.

Social Democrats TD Jennifer Whitmore said: “Energy companies cannot be allowed to make extraordinary profits on the back of such a difficult period for people. It’s important that a marker is put down by Government in the form of a windfall tax, and any revenues accrued from this go towards targeted supports for people at risk of fuel poverty.”

Meanwhile, Mr Ryan would be given wide-reaching powers as Minister “taking control of the fuel system” during an “alert phase” in the event of an oil shortage emergency, under plans being examined by officials.

The plan, which would see an overhaul of 50-year-old legislation governing supply of oil products as well as potentially the introduction of new laws, is designed to enable the State to act quickly in the event of an extreme supply shortage.

Briefing documents drawn up last month and seen by The Irish Times show how officials in the Department of Environment, Climate and Communications envisage putting “emergency planning on a statutory basis” with the “minister having powers to control the use of fuel”. Plans for a serious shortfall in oil-based fuels also include rationing and segmenting the use across different parts of the population.

However, despite the gravity of any potential supply crunch, senior Government sources are significantly more concerned about the impact of further big increases in energy prices this coming winter, which they see as a much more likely consequence of the fallout from the war.