After a couple of months of good news on energy prices, the ESRI have dampened the hopes of struggling households, warning that higher prices could be on the way in 2017.
The think tank’s latest research note has warned that the redesigning of Irish electricity by 2017 to comply with EU regulations on electricity trading — how firms sell into the grid —could lead to higher costs and less transparency around prices.
The ESRI pointed out that Ireland’s ability for advance trading and interconnection — key to ensuring competition in the market — will be severely limited under the redesign.
This means that the regulators will have to rely on continuous monitoring and regulation of the bids made by generators but the new structure could mean such regulation to protect consumers may not be so easy.
The news will come as a blow to consumers who have had some good news on the energy price front in recent months.
Three energy suppliers have announced price cuts since January in the face of pressure from consumers over rising prices.
In January, Bord Gáis Energy announced it will lower its domestic gas prices by 3.5% and its electricity prices by 2.5% from March 16.
SSE Airtricity confirmed it will reduce its household prices for new and existing customers by 4% for natural gas and by 2% for electricity from April 1.
Electric Ireland then announced it would cut its gas prices by 2.5% from April 1. The company had previously announced an electricity cut in November.
The cuts came after mounting anger the large drop in wholesale oil and gas prices was not being passed onto customers.
Crude oil prices more than halved last year to a nine-year-low of less than $50 a barrel, while wholesale gas prices have fallen by more than a quarter.
A Eurostat report last May showed Ireland has the fourth most expensive electricity in the EU, while our gas prices are 22% higher than the cost of gas in Britain. Electricity prices are up 15% since 2011.
However, energy suppliers here no longer have to apply to the Commission for Energy Regulation (CER) when looking to increase or decrease the prices they charge.
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