Pressure mounts on energy companies to pass on savings

In the past year, household electricity bills have gone up 72% while the wholesale energy prices have gone down by 37%.

Pressure is mounting on energy companies to pass on the benefits of cheaper prices for the wholesale sector to consumers.

Last month, wholesale energy prices fell by 52% — in contrast to the 28% hike faced by consumers in the same period.

In the past year, household electricity bills have gone up 72% while the wholesale energy prices have gone down by 37%, according to the Wholesale Price Index published by the Central Statistics Office yesterday.

There is no guarantee that companies will pass on the drop in their energy costs to consumers.

Daragh Cassidy from Bonkers.ie said the fall in wholesale electricity prices has largely been driven by a recent fall in the price of wholesale gas and an increase in wind output.

“We use gas to generate up to 50% of our electricity,” he said, “so the price of gas has a huge impact on the price of our electricity. 

“Whether lower wholesale prices will feed through into lower prices for consumers remains to be seen. Energy suppliers buy their energy for delivery at different times throughout the year, and up to 12 or 15 months in advance through hedging.” 

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The Cabinet has agreed to cap the revenues of electricity-generating companies which do not use gas.

The tax will work by placing a revenue cap on the price of electricity per megawatt hour (MWh), with the Government collecting any amounts above that cap.

It is hoped that anywhere from €340m to €1.9bn from a windfall tax and solidarity contribution from energy providers could end up in the State coffers as a result of yesterday’s Cabinet decision.

Environment Minister Emon Ryan said: “This has not been done to raise revenue for the State, for the general Exchequer. It is to give us a pool of funds that will help us to take further measures when it comes to protecting people from energy costs.”