Energy costs stay steady for August

ENERGY costs have remained steady in August, according to the Bord Gáis Energy Index (BGEI), reducing pressure to increase gas and electricity prices by more than the planned 22%.

The BGEI stayed at 139 during the month as a fall in oil and natural gas prices was offset by increases in both coal and electricity prices.

However, the upward year-on-year trend for wholesale energy prices continues, with the index now 27% higher than in August 2010 and 57% higher than in August 2009 indicating that the long run rising trend remains intact.

Bord Gáis energy trading analyst Michael Kelleher said: “August continued the trend of mixed economic signals from the developed economies while growth remained robust in China and other Asian economies.

“There were also significant developments in the conflict in Libya, which led to hopes for the resumption of the country’s oil production.

“These economic and geopolitical issues resulted in increased volatility in oil prices.

“Electricity prices rose during August due to technical problems on the Moyle interconnector to the UK, which has imported power to Ireland consistently over the past number of years.”

Mr Kelleher said futures markets continue to point to an increase in the index in the fourth quarter.

“Higher natural gas futures prices are the main driver of a higher outlook for the energy index. Concerns over increased demand for the fuel from Japan and Germany due to nuclear power generation shutdowns and the high oil prices seen to date in 2011, which are used to set the price for natural gas for the coming winter are combining to give a bullish outlook for gas prices.”

The energy index put oil down 2% to 146; natural gas down 4% to 173; coal up 1% to 150; and electricity up 5% to 119.

Many power generation plants go on maintenance during the summer, therefore increasing the cost to incentivise generators to start units needed to fill this gap.