Energy price rises turn heat up on consumers

INCREASED CHARGES on networks, rising commodity prices and the euro’s weakness have combined to leave both consumers and businesses facing higher energy bills this winter.

The Commission for Energy Regulation (CER) yesterday approved an 8.5 per cent increase in the price that State-owned Bord Gáis Energy charges households for natural gas supplies.

Electricity prices are also likely to increase by between 3 per cent and 3.5 per cent to cover the growing cost of operating and developing the Republic’s electricity networks.

Such an increase could add between €25 and €28 a year to the average household’s electricity bill, depending on the supplier and other factors, bringing the total to between €750 and €850.

Businesses face hikes estimated at between 5 per cent and 7 per cent for natural gas as a result of the regulator’s decision to increase charges for use of the State’s natural gas transmission and distribution systems, which are owned and operated by Bord Gáis Networks.

The CER’s decision to increase Bord Gáis Energy’s domestic natural gas charges will add an estimated €70 a year to the average bill paid by the company’s 433,000 household customers, driving the annual total to almost €960. Bord Gáis Energy’s prices are regulated, which means the company will have to increase its charges by 8.5 per cent and cannot offer any discount.

While the CER decision does not oblige its rivals to increase their prices, one of them, Airtricity, yesterday confirmed it will be increasing charges to its 120,000 domestic natural gas customers in the coming weeks.

A spokesman said the company has yet to decide on the scale of the price hike. The ESB, which also supplies natural gas to households, said it was reviewing its prices. According reports, the fourth big domestic supplier, Flogas, is also considering its charges.

Industry sources yesterday suggested that both will follow their competitors. Bord Gáis, ESB and Airtricity supply many customers with both gas and electricity.

The regulator said two factors drove its decision on Bord Gáis prices: the euro’s weakness against sterling – most of the Republic’s gas comes from Britain – and the extra cost of using the State’s natural gas supply networks.

The CER recently increased these charges, which account for half the 8.5 per cent price hike.

When it made its submission in July, Bord Gáis asked the regulator for an extra 7.54 per cent. However, the scale of the network charges increase, the euro’s ongoing weakness and the continued rise in the price of gas itself prompted the CER to add almost 1 per cent to this.

Prices for the fuel reached their highest point since early May, 60 pence sterling per British thermal unit, in London on Monday. They slipped back to 59.4 pence yesterday, according to news agency Bloomberg.

The likely rise in electricity prices is also down to increased network costs. The CER recently decided to increase one element of these system charges and is due to decide on the second element shortly. A spokesman for the regulator said the increases could ultimately translate into increases of between 3 per cent and 3.5 per cent for electricity customers.

The network increases are down to the investment required to bring more wind power on the electricity system and the €600 million investment in an new interconnector linking Ireland and Britain, which will open at the end of the month.

The ESB owns the national electricity grid, the backbone of the State’s electricity network, but another State company, Eirgrid, manages it. The ESB owns and manages the distribution system, which transports electricity from the grid to customers.