Gas hike puts further pressure on families

The latest 8.5% gas price hike will put further pressure on hard-pressed families to make ends meet, organisations working with households in financial crisis have warned.

The Society of St Vincent de Paul also warned that families were facing a “perfect storm” with a price rise that came with just one month’s notice when a “staggering” number were already in arrears to energy providers.

The Commission for Energy Regulation yesterday approved the increase, which will come into effect from the first of next month. It follows approval for a 21.7% increase a year ago.

The SVP condemned the regulator’s decision and said it had seen a significant increase in its expenditure helping households with their energy costs, with the figure running at €8.8m in 2010 compared to €3.3m in 2007. Energy costs, it said, were the second most requested area of assistance after food.

It said the regulator had disregarded its warning that a hike would increase energy poverty and could leave families without adequate heat in their homes in the winter and had granted a higher-than-anticipated increase in tariffs.

“This affects the young and the old,” said SVP head of social policy and justice John Mark McCafferty.

“Households who are struggling due to inadequate incomes live on very tight budgets and sudden fluctuations in outgoings can seriously undermine their capacity to manage their budgets effectively.”

He said latest industry figures suggested a significant proportion of households have entered into repayment arrangements for electricity and gas, with 400,000 on a payment plan, 38,000 using pay as you go meters, and a further 22,000 token meters being used by domestic customers.

“People need to plan and budget and need time to prepare for such a price increase. One month is a very short time.

“Many are facing into the perfect storm with only one month to go before a very significant increase as they face in to the winter months.

“Bord Gáis was using a drop in consumption of gas as one of the reasons for the increase sought. This drop is due to the economic recession and people not being able to afford gas supplies. Increased prices will force a further reduction in consumption.”

A spokesperson for the Money Advice Budgeting Service (Mabs), Michael Cullotty said the latest increases would put further pressure on families to make ends meet.

He said already some people were only left with €10 a week after paying off credit card debt.

He advised people in crisis to take advice and budget and only make affordable payments to credit companies.

The Commission for Energy Regulation said it regretted the decision and understood that increases may cause problems for many customers. It added that wholesale gas costs in which the euro/sterling exchange rate played a big part were something Ireland had no control over.

The regulator said there were a number of competing gas suppliers and that it encouraged consumers to shop around for the best value. The next review of the tariff will take place in January.

Consumer Association of Ireland chief executive Dermott Jewell said the hike with just one month’s notice was an extra burden for consumers who would have to cut back to fund the extra costs. He said this would have a knock-on effect for individual families and small businesses on top of other increases.

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