Regulator orders up to 12% cut in energy prices

CONSUMERS can take some comfort from the fact that gas and electricity prices are set to drop by up to 12% from May 1, but it has been claimed the cuts should be more significant in line with the downturn in world prices.

The Commission for Energy Regulation (CER) announced the cuts due to falling global gas prices and said if global prices continued to stay low consumers could look forward to further reductions before the winter.

The ESB has been told to cut prices by an average of 10.3% from May 1, while gas prices will be reduced by 12% on that date.

However, Fine Gael spokesman for energy Deputy Simon Coveney claimed prices should have been cut even further.

Deputy Coveney questioned why the CER would only cut the rate by 12% when international gas prices have reduced by one-third.

He claimed that during the recession the regulator should ensure that energy prices are as low as possible for hard-pressed householders and businesses.

“Ireland is on its knees and energy prices is the one place in which we can give people some kind of relief,” the FG deputy said.

He said 95% of gas used in this country is imported from Britain, which means Irish consumers are at the mercy of several factors that affect the price they pay.

“Around 60% of the retail price paid by consumers and businesses for gas is directly related to its wholesale price and there has been a 30% reduction in that figure this year. The plummeting wholesale price of gas allied to a dramatic drop in the value of sterling must also be a factor in determining the cost of gas. Gas is purchased in sterling and while Irish exporters are struggling in the face of the recent devaluation of the pound, we should be reaping the benefits in terms of gas imports,” Deputy Coveney said.

He said allied to the wholesale price reduction and the devaluation of sterling, seasonal factors always see a further drop in the wholesale price of gas due to a reduction in demand.

“That’s another reason the 12% reduction is entirely unsatisfactory,” he said.

Dermot Nolan of the CER said it would not be appropriate to impose a bigger decrease now, in the event of a world price rise.

Mr Nolan said the CER always tries to ensure the customer pays the lowest possible price for fuel and added that Ireland’s prices compare favourably with other countries.