The cost of energy for small and medium sized business customers of Electric Ireland is to fall by between 10 and 15 per cent from next month but there will be no matching decrease in prices for domestic customer.
The State’s largest energy provider has confirmed it plans to to reduce the cost of electricity for small and medium enterprises by an average of 10 per cent in March.
The decrease come as a result of a fall in the cost of energy on international markets with prices currently standing at around 20 per cent less than they were this time last year.
However Electric Ireland said it would not be passing cuts on to domestic customers but would keep its rates under review.
A spokesman for Electric Ireland said that successive price increases over the last 18 months – which have seen the price of typical bills jump by more than 100 per cent – had been “driven by wholesale gas costs, which have increased by many multiples”.
He said that while wholesale markets have fallen in recent months, “they remain at levels substantially higher – at multiples of their levels – prior to the crisis”.
He pointed out that energy suppliers “typically hedge energy costs in advance to secure costs for the upcoming year, so any increases or decreases in the wholesale market can take some time to feed into retail prices seen by residential customers.
“The lag between movements in the wholesale market and movements in retail prices is a function of both the rate of change in the wholesale market, and the tenure of forward hedging contracts for electricity and gas”.
He said forward hedge contracts can be for a period of up to 24 months and are entered into at different points in time and for different volumes. “It is the mix of historical contracts and more recent contracts coupled with prevailing and projected wholesale prices which are used to determine residential prices from time to time. For this reason it is very difficult to project the trajectory of residential electricity and gas prices”.
All that he could say about domestic energy costs was that the company would “continue to keep its prices under constant review, and is committed to providing customers with the best value possible across a broad range of products.”
“I do understand their point about hedging but domestic customers shouldn’t have to wait. These are unique times and every single customer is struggling,” said consumer advocate Dermott Jewell.
He said that there had to be some “consideration shown or loyal customers. I know that this is good news for businesses but something has to be done for domestic customers and more consideration has to be shown towards them.”
According to Daragh Cassidy of price comparison and switching website bonkers.ie. while energy prices “have fallen hugely on wholesale markets over the past few months and the outlook is much more positive than it was even a few weeks ago” prices still remain “at very high levels”.
He noted that despite all the recent falls, “the price of gas on the UK wholesale market is still over double what it was around 18 months ago for example”.
He said that as a result of energy price hedging “it will take some time for the fall on wholesale markets to feed through into lower energy bills for households. However I’m hopeful we might see prices decrease slightly in the second half of this year”.
However he warned that prices are “likely to remain high for households for the foreseeable future”.
He said that in “order for gas and electricity prices to return to normal levels (which we last saw in early 2021) they would need to fall by around 60 per cent. I absolutely do not see this happening any time soon given where wholesale prices still are”.
