Energy suppliers not making 'excessive' profits from soaring gas and electricity prices, watchdog says

The Commission for Regulation of Utilities said competition in Ireland’s retail electricity and gas markets was functioning reasonably well and generating rivalry among companies.

Suppliers are not making “excessive” profits from sky-high electricity and gas bills, while not all households are “benefiting” from chances to reduce their energy costs, the energy regulator has said.

In an interim report requested by the Government, the Commission for Regulation of Utilities (CRU) said competition in Ireland’s retail electricity and gas markets was functioning reasonably well and generating rivalry among companies.

The report also suggests the average household could save €395 for electricity and €184 for gas a year by switching their tariffs.

However, it also comes as data published last week by European Commision's data arm Eurostat suggested Ireland had the highest electricity prices in the bloc last year, with consumers here paying 40c per kilowatt hour on average compared to the European average of 28.9c, a €480 a year difference.

Analysts are also expecting energy companies to announce further hikes in the weeks to come after Prepay Power announced price increases earlier this month.

The CRU had been tasked by energy minister Darragh O’Brien with conducting a review of competition and what drives prices in the energy markets, and enlisted the help of the Competition and Consumer Protection Commission.

Its work is intended to inform the Government’s National Energy Affordability Taskforce, providing a breakdown of how different factors affect consumer bills.

The report suggests details on the profit margins from energy suppliers do not point to “excess profitability”, but said more work was needed to examine this in different sectors.

When bills surge, this is primarily driven by wholesale costs, charges being passed through and network investments.

"The data we have gathered to date from some suppliers indicates that margins remain relatively low,” the report said.

“In fact, the information shows that as costs and bills increased following the invasion of Ukraine in 2022, supplier margins moved into negative territory.” 

The CRU said there was significant switching taking place, which was allowing customers to secure better deals, but pointed out the benefits of competition “may not be flowing equally”.

It pointed to weaker customer engagement, limited switching by some, and not taking up lower-cost tariff options as reasons behind some consumers not “benefiting to the same extent”.

The CCPC and CRU will work on a final version of the report, which will encompass a more detailed analysis of the energy retail markets, including supplier margins.

It comes as oil prices again rose on Monday after US president Donald Trump rejected Iran’s response to the latest peace proposal.

On Truth Social, he said it was “totally unacceptable” and “I don’t like it”.