Irish wholesale electricity prices fell last month as the cost of gas began to slide on European markets, industry figures say.
Natural gas prices, which determine Irish electricity costs, have been falling in Europe in recent weeks as supplies continued while the “winter heating season” ended.
Gas traded at €42-€43 for enough of the fuel to generate one mega watt hour (MWh) of electricity on continental markets late last week, far off a near-€340 peak hit in August.
Industry figures calculate that Irish wholesale electricity prices averaged about 24 or 26 cent a kilowatt hour (KWh) – the unit in which it is sold to households – last month, relatively close to its cost in February.
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This compares with an estimated range of about 28-31 cent in January, which was in turn down on the previous month, when demand tends to peak.
A Central Statistics’ Office release in late March stated that wholesale electricity prices fell 1.9 per cent in February from January.
Irish families pay about 44 cent a KWh for their electricity following a series of hikes that began in late 2021 as the energy crisis first began to bite. Up to that point they paid 15-18 cent.
Wholesale electricity prices here vary from hour to hour, depending on demand. While little power is bought and sold at those prices, they set the basis for forward-buying contracts.
Most observers expect further falls in European natural gas prices in coming weeks, which should help cut wholesale electricity prices here further as the fuel is used to generate about half the power that Irish people need.
European gas stocks are higher than normal following a mild winter. At the same time, shipments of liquefied natural gas (LNG) are due into the continent this month, while Russian group Gazprom has also been supplying the region.
Leading Irish electricity suppliers have yet to say if they will cut prices to reflect falls in wholesale prices dating back to an August 2022 peak of more than 50 cent a KWh. Most point out that they buy the electricity sold to families and small businesses months in advance, sometimes up to two years out, so any cuts in those charges are likely to lag movements in wholesale markets.
Last week, State-owned Electric Ireland, Bord Gáis Energy and SSE Airtricity all maintained that forward buying or “hedging” prevented them from responding immediately to falling wholesale prices.
Electric Ireland’s parent, ESB, also said recently that the company wanted to see more consistent falls in wholesale prices before it could begin cutting the rates at which it charges households.
All three companies noted that they had not profited from selling electricity to homes last year as a consequence of various steps they say they took to try to ease the burden of rising power costs on families.
Industry sources say that growing numbers of larger businesses that are coming to the end of long-term electricity supply contracts are opting to track wholesale prices rather than lock themselves into expensive energy deals.
