Michael McGrath: It is 'past time' utility companies pass on drop in energy prices to consumers

Finance Minister Michael McGrath warned firms that it should not fall on the taxpayer to support households coming into the winter. Picture: PA

It is "past time" that utility companies pass on "dramatic" drops in energy prices to consumers, Finance Minister Michael McGrath has said.

Speaking in Cork, Mr McGrath warned firms that it should not fall on the taxpayer to support households coming into the winter.

He added that he expects Irish banks to improve the offering for savers "in the coming weeks" amid growing public criticism that deposit accounts continue to see poor returns despite robust profits for financial institutions.

"As temperatures dip, people will be consuming more energy and will be using their heating more in their homes," said Mr McGrath. 

"We have seen a dramatic fall in the wholesale price of energy, but we have yet to see any significant pass-through at all of those reductions to the consumer level.

"I think some lag was justified, we do understand the nature of the commercial arrangements that these companies enter into, in hedging and futures contracts. But many months have passed since we have seen the price reductions in the wholesale level, so I do expect we will see some reductions in the price of energy for wholesalers and for businesses." 

Mr McGrath has indicated in recent weeks that similar supports to the €200 electricity payments to homes will be recycled in the upcoming budget, but said it should not be incumbent on the taxpayer to pick up the slack after energy wholesale prices have fallen.

"The reductions are unlikely to put us back where we were before the war in Ukraine at a consumer level, even though they are there at a wholesale level. I think it will take some further time for it to be fully passed through. 

"But as we come to make decisions in the next six to seven weeks in relation to the budget, it should not all fall on taxpayers to provide support to the households that need it. Commercial conditions have changed. The price of hotel energy has fallen dramatically. It is past time that consumers saw the benefit," he said.

Bank interest rates

Referencing Public Expenditure Minister Paschal Donohoe's comments that Irish people could deposit their savings in a bank abroad with low interest rates at home, Mr McGrath said he believes better rates are coming soon.

"Members of the public are absolutely entitled to make financial decisions in their own best interests," he said.

"I do anticipate that we will see increases in the weeks ahead in rates of interest paid by banks relating to certain savings and deposit accounts.

"I think the market conditions are such that such increases are justified. They are commercial decisions for the bank but I certainly expect and anticipate that we will see improvements in the rates of pay. 

"While the banks have not fully passed on the increase in interest rates to mortgage holders, they've passed on even less of the increase in the ECB interest rate to savers and depositors. I do think that mismatch will be addressed and we will see progress on that over the coming weeks," he said.

RTÉ funding

In relation to the ongoing RTÉ funding question, Mr McGrath said there are "two parts" to the issue.

"The immediate issue that arises in the context of the budget relates to interim funding, and the need to ensure that RTÉ's core work can be sustained as a public service broadcaster. The second part does relate to the longer-term need for a sustainable funding model for RTÉ and for public service broadcasting generally. 

"A decision will be made in the coming months but I do think it is important that we see the work through of various investigations that are underway... we'd like to see a culture change, we want to see the leadership of RTÉ help to rebuild trust and confidence in the organisation. 

"I think before we commit additional taxpayers' money, it is only legitimate that we will ensure that progress has been made, that the culture of the organisation has improved, and, quite frankly, is being run in a better way."