Irish homes continue to pay high prices for energy while European suppliers cut rates on the back of falling wholesale charges, new figures show.
Energy prices have more than doubled over the last two years, with families now paying up to 44 cent a kilowatt hour for electricity, against about 18 cent in 2021.
Analysis by economist Simon Barry shows that, since 2020, Irish prices have risen more sharply than in the rest of the euro zone, while charges there have fallen 6 per cent since October.
Energy crisis
Gas and wholesale electricity prices have been falling here and in Europe since hitting an autumn peak, but Irish suppliers say “hedging” deals, where they buy energy months in advance of selling it, prevent them from passing these cuts on to customers.
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Mr Barry, an independent economist, who drew on Eurostat’s harmonised index of consumer prices, says Irish people have suffered a double whammy as a consequence of the energy crisis.
“They have faced much steeper increases on the way up in both gas and — especially — electricity prices, and, in contrast to the aggregate euro zone, they have not benefited, yet at least, from any price reductions,” he says.
His analysis shows that Irish electricity prices have risen 112 per cent since 2020, against an average of 62 per cent across the euro zone.
“In fact, the 112 per cent increase faced by Irish households is the fourth strongest of the 20 euro zone member states over the period: only Italy, Estonia and the Netherlands experienced greater increases,” he notes.
March gas prices here were 137 per cent higher than in July 2020, when European prices started rising, far higher than the 81 per cent hike across the euro zone over the same period.
“Again the huge increase experienced by Irish households is the fourth strongest increase of the 19 euro zone states for which data is available over the period,” says Mr Barry. Latvia, Austria and Greece topped the Irish increase.
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And although prices here have not increased since December, they have not fallen at a time when euro-zone charges are falling.
Leading Irish suppliers insist that hedging deals, meant to protect consumers from price volatility, must unwind before they can cut rates.
Dara Lynott, chief executive of industry body the Electricity Association argued on Thursday that Irish suppliers began increasing prices much later than European suppliers.
He conceded that they may have “hedged badly” as a consequence, locking themselves into forward contracts at high prices that may take time to unwind.
“It’s only in hindsight that you can tell,” he said. “It really comes down to decisions by traders on the basis of the company that they’re in and its appetite for risk.”
However, Mr Lynott maintained that hedging worked, as wholesale prices rose by as much as 300 per cent while consumer rates only increased 112 per cent.
Gas dependent
He also explained that Ireland’s dependence on gas, which generates more than half its electricity, meant our “fuel mix” was different from other European countries.
The State has two gas sources — the Corrib field off the west coast and imports via a pipeline from Scotland, which provide 75 per cent of our needs.
Mr Lynott said the lack of alternatives, including liquefied natural gas and storage, left Irish consumers more vulnerable to price shocks.
ESB-owned Electric Ireland said it had not increased prices since October and continued to offer the lowest standard variable tariff to households.
Bord Gáis Energy said its hedging strategy had protected customers from the “extreme volatility” of the last 18 to 24 months.
SSE Airtricity pointed out that wholesale prices had risen as much as 1,000 per cent from previous levels, far higher than consumer charges, demonstrating the active role suppliers played in protecting customers.
