State-owned Electric Ireland will cut small business electricity bills by 10 per cent from Wednesday but leave household charges untouched.
Falling wholesale electricity prices have sparked calls on suppliers to cut bills for homes and businesses that have endured 18 months of increases.
ESB subsidiary Electric Ireland said on Monday that it was cutting small and medium-sized business electricity charges by 10 per cent from Wednesday March 1st.
However, it is not cutting household charges, which have seen some families pay up to €4,000 a year for electricity and gas, depending on their consumption.
The company maintains that it offers households the best value. “As of February 1st, 2023, Electric Ireland offers the lowest estimated annual bill for electricity on the market,” it said.
Electric Ireland’s move follows sustained falls in wholesale electricity costs. Last month they were about 16.22 cent a kilowatt hour (kWh), the unit in which power is sold to homes, from a high of 38.76 cent in August.
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Network charges added 8 cent to 12 cent to this, bringing the likely maximum to around 28 cent per kWh.
Typically an Irish family uses about 4,200 kWh of electricity a year, or slightly more than 11.5 kWh a day, implying weekly costs of more than €36.
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Electric Ireland’s cut covers all businesses up to those classed as large energy users, which are mainly manufacturers, pharmaceutical producers, data centres and other big businesses.
Figures obtained recently by The Irish Times show suppliers charge some of these companies as little as 7-12 cent per kWh last year and in 2021.
The State company is cutting smaller businesses’ bills as their charges are tied more closely than domestic rates to wholesale prices.
Electric Ireland explained on Monday that it buys the electricity sold to domestic customers up to two years in advance to secure costs, so movement in household bills lags behind that of the wholesale market.
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The company maintained that those “hedging” contracts, coupled with prevailing and projected wholesale prices, determine what it charges families.
“For this reason it is very difficult to project the trajectory of residential electricity and gas prices,” it said.
In December, Electric Ireland said it would forego profits from its residential business and gave a €50 credit to household customers.
Energy industry players face growing pressure to cut their prices, particularly to households, whose €200 a month Government credit ends this month.
Recently, Minister for Environment Eamon Ryan said he agreed that electricity and gas suppliers should begin cutting prices as soon as possible.
Business groups have increasingly questioned power companies’ explanation that their hedging contracts leave a time lag between wholesale price falls and reductions in bills, particularly as they began increasing prices shortly after dramatic leaps in their own costs in autumn 2021.
“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 lobbyist Dermott Jewell.
He said that there had to be some “consideration shown for 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.”
