Reductions in energy prices 'could take a while', expert warns
Taoiseach Leo Varadkar said this week that the Government may announce another energy credit for households if needed later in the year, but that would be something considered in the next budget. File picture
Consumers should not get their hopes up about falling energy bills anytime soon despite pressure on firms to cut prices, a financial expert has said.
Earlier this week, Pinergy announced a drop in its prices that will result in consumers saving around €180 a year. It is the first price drop announced by an electricity supplier in more than two years.
Pinergy said changes to its standard residential electricity prices from March 31 would mean a 7.1% decrease to the typical household cost, or €183 annually, but the firm was already one of the most expensive for customers.
Financial expert Nick Charalambous of Cork-based Alpha Wealth warned that the drop from Pinergy will mean little in the short term.
"While the announcement of Pinergy reducing its energy prices on March 31 is good news, there is some caution before we get too excited. Firstly, Pinergy increased its prices by 18% last month alone, so the falls are still quite small in context to recent rate rises which have occurred seven times over the last year-and-a-half.
"Energy companies buy energy in bulk on the wholesale market, so it could take a while before they are in a position to reduce prices for personal customers. That said, with customers really feeling the rate increases, it should put pressure on the main providers to reduce prices.
"I feel it could be more the medium term than short term, however, before we see these reductions take effect. The proposed additional energy credit may well be extended or may not be granted at all so might mitigate some of or all of the benefit of this particular fall," he said.
Taoiseach Leo Varadkar said this week that the Government may announce another energy credit for households if needed later in the year, but that would be something considered in the next budget. An already announced €200 energy credit is due in the next two months.
Pinergy warned that "wholesale pricing remains volatile and inflated", at 300% of the cost before the covid crisis began, when it made its price drop announcement.
According to the latest data from the Central Statistics Office (CSO), wholesale electricity prices decreased by nearly 41.5% since December 2022 and were 19.5% lower in January 2023 when compared with January 2022.
As well as households, businesses have come under the cosh from soaring energy bills, with many speaking publicly in recent months of now being on the hook for five-figure monthly bills, which they say is unsustainable.
The Government's decision to broaden its Temporary Business Energy Support Scheme (TBESS) has been largely welcomed. Cork Chamber said it is a "very necessary move".
Chief executive Conor Healy said: "The reduction of the threshold for qualification from a 50% increase in electricity or gas costs to 30% increase will allow for greater accessibility to the scheme.
"The fact that claimants will be eligible for increased relief from 40% to 50% of eligible costs, coupled with the increase in the monthly limit to €15,000, will help TBESS to deliver a more meaningful impact for those most affected by the soaring energy costs."
