Business Irish

Wednesday 17 September 2014

Utility companies hike prices as familiessuffer

Published 09/04/2013 | 05:00

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DESPITE unemployment at staggeringly high levels and homeowners facing the new property tax and water charges, Ireland's utilities continue to drive through price rises.

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The cost of home heating has increased by upwards of a fifth in recent years, putting pressure on already strained family budgets – especially in the wake of a record cold March.

Three companies in Ireland vie for the electricity and gas business – ESB/Electric Ireland, Bord Gais and Airtricity.

ESB and Airtricity have been enjoying soaring profits, while homeowners are having to suffer hikes in prices.

Since the spring of 2011, prices have soared by an average of €234 for customers paying for gas through Bord Gais, and €189 for those paying for electricity with ESB/Electric Ireland, according to the consumer website bonkers.ie.

The ESB, Bord Gais and Airtricity have all raised their prices in the last year for residential customers.

An ESB 6pc price increase came into effect in October, while Bord Gais was granted an 8.5pc price increase in September.

The company had initially requested a 7.4pc hike, but the Commission for Energy Regulation (CER), which approves price changes at the state-owned energy company, said that during the consultation process it subsequently increased that request to 9pc.

Customers of Airtricity had bills increased by 4.7pc for gas, and 8.5pc for electricity.

Business customers have slightly different pricing, but are subjected to the same risk of price increases.

Contracts

The ESB said small businesses and many medium-sized businesses purchase their energy on tariffs and fixed-price contracts similar to residential customers.

"The large energy users and some of the bigger medium businesses purchase their energy requirements on the basis of individual bespoke contracts with their chosen supplier," an ESB spokesman said.

"Some will opt for fixed price plans for a year or more, and others will prefer more flexible arrangements that are designed to dynamically reflect international fuel prices and provide the customer with the ability to limit this exposure, if desired, through trading."

Important parts of state- owned ESB and Bord Gais are for sale as part of targets to dispose of state assets under the EU/IMF bailout, while both companies enjoy healthy profits.

Pre-tax profits in ESB jumped fourfold last year from €78.8m in 2011 to a massive €327.6m in 2012.

Bord Gais saw their profits fall by a quarter in 2011, but they still brought in a sizeable €94m. Figures for 2012 are not yet available.

Airtricity, which has the smallest customer base, saw profits before tax soar to €13.3m in the year to the end of March 2012 – a considerable turnaround from the €13.8m loss suffered the previous year.

In January, the Dail's Public Accounts Committee heard that the number of gas customers being cut off across all providers jumped almost fivefold between the first three months of 2011 and last summer, from 519 to 2,373.

CER has estimated that around 35pc of these cut-offs related to vacant premises.

The number of electricity disconnections peaked at 5,000 in summer 2011, before falling back to 2,960 between April and June of last year.

The providers have blamed a myriad of factors for the price hikes, including international energy prices, wholesale costs, and increased network charges.

Each of the providers argue that they are working with customers struggling to meet their bills, particularly those in arrears.

Giving some small respite, CER has forecast that prices are unlikely to increase in the near-term.

Customers hope that optimism isn't misplaced.

Irish Independent

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