Wholesale electricity prices down 42.5% but consumers told not to expect lower bills yet

Wholesale electricity prices fell by 13.5 per cent last month and were 42.5 per cent lower when compared with April 2022, according to the Central Statistics Office (CSO).

The agency’s latest wholesale price index points to a significant decline in wholesale energy prices from the peak of the energy price surge last year. However, consumers have been warned not to expect domestic gas and electricity prices to return to 2021 levels as many companies had signed up for long-term energy contracts with a fall in wholesale prices unlikely to be reflected in domestic bills for some time.

Daragh Cassidy, head of communications at price comparison website Bonkers.ie, said energy suppliers buy their energy for delivery at different times throughout the year, and sometimes up to 12 or 24 months in advance through hedging. “This is to ensure security of supply and to try ensure households aren’t faced with extreme swings in the price of their energy on a weekly or monthly basis.

“So the price households pay for their gas and electricity is usually an average price of the cost of energy on wholesale markets over the course of around a year or two. So you can’t really draw a direct line between the wholesale price of energy on a given month and retail prices,” Mr Cassidy said.

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“We’ll need to see a further and sustained reduction in the price of energy on wholesale markets before we can talk of smaller bills for consumers,” he added.

Mr Cassidy noted prices remain high by historical standards.

Back in 2020, before the energy crisis kicked off, the wholesale price of electricity in Ireland was around €40 per MWh (megawatt-hour). It then rose as high as nearly €400 at one stage in 2022. Last month it dropped to €126 and the average price for the first four months of the year was still €148. “So wholesale prices are still over 300 per cent above what might be considered normal levels,” Mr Cassidy said.

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To put things into perspective household electricity prices have gone up by around 100% to 150% depending on your supplier since late 2020, he said.

The latest CSO data show wholesale prices in other sectors were continuing to rise.

Producer prices for food products rose by 0.8 per cent in the 12 months to April, while the food products, beverages and tobacco index saw an increase of 1.1 per cent. Some of the most notable changes in producer prices for food products over the 12 months to April were: fruit and vegetables (+17.8 per cent), fish and fish products (+14.7 per ent), grain, milling, starches and animal feeds (+8.7 per cent) and dairy products (+6.8 per cent).

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The most notable changes in other producer prices in the year were: other non-metallic mineral products (such as glass, ceramics, cement, concrete and stone) (+11.7 per cent), beverages (+9.6 per cent), wearing apparel (+8.8 per cent), and wood and wood products (+6.8 per cent).

Wholesale prices for construction products increased by 1.5 per cent in the month and by 11.7 per cent in the 12 months since April 2022. The biggest driver of costs in the construction sector were plaster (+35.6 per cent), structural steel fabricated metal (+31.7 per cent) and ready mixed mortar and concrete (+27.4 per cent).

The CSO statistics indicated that producer prices for products sold on the domestic market are now 7.8 per cent higher than they were in April 2022, with export producer prices falling by 1.2 per cent and overall producer prices falling by 0.7 per cent in the year.