Watchdog says energy price cuts on way but warns cost will not fall to 2021 levels

Commission for the Regulation of Utilities says Irish suppliers’ hedging strategy protected consumers from worst of post-Ukraine invasion cost spike

Irish domestic energy bills are likely to fall in the months ahead, although any expectations that the cost of domestic gas and electricity will return to 2021 levels are unrealistic, according to the energy regulator.

A report from the Commission for the Regulation of Utilities (CRU) suggests there will be at least one further price cut from providers in the short term, but noted that wholesale prices still remain higher than they were in 2021.

The CRU also confirmed that Ireland is the ninth most expensive country in Europe for electricity, while the cost of domestic gas is higher in only four other countries across the Continent.

The CRU suggested that while prices in Ireland are comparatively high, the cost of energy here had climbed more slowly in the wake of Russia’s invasion of Ukraine than in other countries. It suggested “hedging” strategies used by Irish energy suppliers, which saw them buy energy in advance, protected consumers here from a dramatic price spike in the immediate aftermath of the invasion.

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It highlighted a “clear time lag between when changes in wholesale gas prices happen and when those changes reach retail prices, which customers are charged”.

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It said the basis for the time lag “is dependent upon suppliers’ hedging strategies, with some suppliers buying hedging contracts up to 24 months in advance. This means that much of the current energy being consumed in Ireland today was purchased at a time when the wholesale price was higher than it has been in recent months. ”

The commissioner, Aoife MacEvilly, said: “We are aware of the challenges that customers face in the context of ongoing high energy prices. The CRU will continue to closely monitor retail market developments and keep customers informed.

“The ongoing stabilisation of wholesale markets has driven recent retail price reductions, with the scope for further reductions to follow. However, as wholesale and retail prices remain above historic average levels, we would continue to urge customers to be active in ensuring they are on the most suitable tariff for their needs.”

She said that “switching supplier, renegotiating with your current supplier, or signing up for a smart tariff can deliver savings for customers. Customers struggling with arrears are also encouraged to engage with their supplier to ensure they are protected under the supplier engage code.”

The CRU also published details of customer contacts it received last year, with a total of 31,517 contacts from energy and water customers recorded.

Electricity account problems, Government credit queries and billing issues drove the largest volume of contacts, the CRU said.

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor