ESB price hike plan criticised as cost of energy falls
ESB are set to increase electricity charges while wholesale energy prices in Ireland are continuing to fall, according to new research.
The Board Gais Energy Index, an Irish-specific index designed to measure prices in the wholesale energy markets, fell 2pc to its lowest point since April, at the same time as ESB said they would be increasing electricity charges by nearly 5pc from next month.
The index fell three points to 108 after oil dropped $4 and natural gas dropped 7pc in euro terms. Coal and electricity prices also fell.
Electricity fell by 2pc in August, while at the same time demand remained at similar levels to June and July. The news of the decrease will further fuel criticism of ESB's decision to increase electricity prices by 4.9pc from October 1.
The increase in the retail energy prices at a time when wholesale prices are falling was criticised by Labour's spokesperson on energy, Liz McManus.
"The Government have kept saying that the high cost of fossils fuels, and our dependence on them, is the main factor in our increased electricity prices. It is extraordinary that there are no benefits to consumers when the cost goes down," she said.
The Communications, Energy and Natural Resources Minister, Eamon Ryan, was not available for comment.
"The recovery of the euro continued in the early part of August, but those gains were eroded towards the end of the month," said Bord Gais.
Michael Kelleher, an energy trading analyst with Bord Gais Energy, said that while oil prices had been driving the index, the global economic situation remained the key to energy prices in the long term.
"Global macro economic data continues to be the biggest driver of the movements in the index as a result of its effects on both currency and commodity prices. There has been a strong correlation between currency, commodity and equity markets recently.
"The futures markets continue to price in a moderate rise in commodity prices in the coming months. However, the pace of economic recovery in developed economies in Europe and the Americas, coupled with a confirmation of the rate of growth in developing economies, could have a major impact on energy prices in the coming months, particularly oil and coal."