Energy price hikes - Monopolies must be overhauled

GLARING disparities between the prices Irish householders are paying for gas and electricity compared with their British counterparts demand a major policy change in the public interest.

As revealed today by the Irish Examiner, from next month householders here will be paying a staggering 87% more for gas supplies than British consumers.

Our analysis, comparing existing prices in Britain with the bills Irish consumers are set to face, also shows that if ESB’s proposed 19.7% hike is approved, electricity bills will be a shocking 54% bigger than in Britain and 26% more than the North.

Following his recent decision to grant Bord Gáis a 33.8% hike, Ireland’s energy regulator was widely criticised for militating against the interests of consumers by rubber-stamping the State-owned monopoly’s demands.

Within days, a politically embarrassed Government was forced to offset the impact on people on the margins of rip-off Ireland. Aware the grey vote will be hugely significant in next summer’s general election, the Coalition moved swiftly to repair political damage by promising 335,000 pensioners and social welfare recipients one-third more free gas and electricity.

With the onset of winter looming, the decision to expand the free energy scheme, at an extra cost of €45 million to taxpayers, was the only reasonable course of action to take. However, for the average consumer, already paying through the nose, there is no reprieve in sight. At present, householders in Britain are paying up to €696 a year for gas whereas consumers in the Republic face annual bills of €900.

But when the enormous Bord Gáis increase comes into force on October 1, Irish consumers will have to pay €1,207 for gas, almost 90% more than consumers are paying in Britain.

The irony is that energy prices have also risen sharply in Britain where the market is carved up between competing companies. In theory, that should mean greater competition and lower prices.

Yet, despite a global trend of somewhat lower oil and gas prices, bills continued to rise for British consumers. In marked contrast with the rubber-stamp image of Ireland’s energy regulator, the British executive is threatening to “go after” gas companies which fail to pass on falling wholesale prices to customers.

Following complaints from the British regulator Ofgem, the European Commission is investigating why wholesale energy prices in Britain have risen so steeply.

Because of Ireland’s monopolistic scenario, consumers are between a rock and a hard place. The lack of a meaningful national energy policy makes operators reluctant to venture into the Irish market.

According to Bord Gáis all their long-term fixed contracts have expired and they now have to pay the going market rate whereas companies selling gas in Britain benefit because the country owns the gas fields. That begs the question whether Shell will deliver gas at more reasonable prices for Irish consumers when it develops the Corrib Field?

Shell is unlikely to come under pressure from this Government since it was Fianna Fáil that slashed oil and gas royalties accruing to the State, claiming the old policies stymied exploration. While other states are tightening control over dwindling oil and gas reserves, Ireland is seen as relinquishing control.

For the sake of consumers, there is now an irresistible case to emulate the practice in Britain where the energy regulator is more concerned with the plight of customers and less amenable to industry.

Unlike British householders, who are encouraged to switch to cheaper gas suppliers, consumers here are denied that luxury because of a restrictive and costly energy regime. In the public interest, the Bord Gáis and ESB monopolies must be overhauled.

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