Call for probe into failure of energy companies to pass on lower prices to consumers 

A new survey suggests that almost all consumers (96%) have seen a rise in their energy bills in the last four to six months.

An examination should be undertaken as to why energy companies haven’t passed on lower wholesale prices to hard-pressed households, and there should be “full and transparent visibility” on such firms’ hedging operations, an Oireachtas committee has recommended.

Examining the Government’s plans to impose a windfall tax on energy companies, the Oireachtas Environment Committee said legislation needs to make clearer which parts of society will benefit from such taxes as “it is essential that these are directed to those who are most vulnerable”.

It comes as a new survey suggests that almost all consumers (96%) have seen a rise in their energy bills in the last four to six months, with just 2% saying it had stayed the same only because they reduced their heating or cooking at home.

Proposals here to address the huge profits made by energy companies in the wake of the war in Ukraine come on foot of EU steps to take on these windfall gains.

Minister for the Environment Eamon Ryan said at the time that the EU agreement and Government’s approval of it would “ensure that windfall gains will be collected and redistributed to support energy consumers”.

Analysis

A regulatory impact analysis of the measures commissioned by the Government estimated the windfall tax could net between €200-€450 million.

This analysis also said that if the Government didn’t take these steps, it could lead to enforcement and potential infringement fines from the European Commission. Not collecting the tax would also mean missing out on funds to provide financial support to vulnerable households or on funds to support companies in energy-intensive industries.

Having looked at the Government’s proposals, the Environment Committee of TDs and Senators said they support the measures, particularly given households are still paying “extremely high prices on energy bills”.

“The Committee agrees that wholesale prices for energy should be reflected in the electricity market and recommends an examination be undertaken to ascertain why pricing for final consumers has not decreased in line with wholesale prices,” it said.

It also recommended that elements of the bill are sharpened to make clear who will benefit from the windfall taxes, while separately highlighting issues with the energy regulator CRU and the allocation of 25% of its budget to external consultants. It said more should be done by CRU in-house.

Within CRU’s remit, the committee said there should be ongoing analysis of developments in the market such that the “return of windfall proceeds to the State is maximised”.

Energy costs

Meanwhile, a survey for Aviva has highlighted how nearly all households in the country have found their home energy bills sharply on the rise. This comes against the backdrop of the next electricity bills coming through the letterbox to be the first in many months not to have the €200 Government credit helping to offset the cost.

“Despite the wholesale price of electricity falling again in January according to figures released from the CSO, most people have yet to see reductions in their energy bills based on the findings of our latest survey,” Aviva’s Billy Shannon said.