Business Personal Finance

Monday 24 October 2016

Energy firms are mugging us and should be called to account

Published 24/01/2016 | 02:30

Minister for Energy Alex White must haul energy suppliers over the coals Photo:Tom Burke
Minister for Energy Alex White must haul energy suppliers over the coals Photo:Tom Burke

We mugs are subsidising mega profits being made by energy companies. Commodity prices, like oil and wholesale gas, are falling like a stone - yet the price cuts for householders by the energy firms in this country have been piffling.

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Heating oil prices have come down by decent amounts, so too have petrol and diesel prices at the pumps - but electricity and gas suppliers are proving to be the winter's misers.

All the energy companies have announced price cuts in the last few months, but these have been small. Homeowners have got price cuts of just 5pc. At most, this translates into a reduction in the annual cost of energy bills of around €50.

Consider that the cost of the main input for electricity and gas suppliers to homeowners - wholesale gas - has crashed.

The cost of buying natural gas on the wholesale market dropped by 23.2pc on average during the fourth quarter of last year compared with the same period in 2014, according to the 2015 Wholesale Energy Market Report published by independent supplier, Vayu Energy.

Householders get a 5pc cut in prices, when suppliers are benefiting from a 23pc drop in costs. Hardly fair.

Of course, energy suppliers argue that there are many factors at play determining the bill we pay. These include the cost of delivering electricity and gas into homes, government levies and taxes, and electricity suppliers' costs. Also in the mix is the weak euro, that applies to gas that is imported. (It is worth noting that gas is now flowing from the Corrib field off the west coast.)

However, it is still significant that raw material costs makes up almost a third of a typical residential bill, according to Electric Ireland.

This means there is far more scope for much larger reductions in the prices charged to households.

None of the energy suppliers to households are regulated on the prices they charge to householders. Aspects of the bills, such as the public service obligation, which provides a subsidy for renewable energy and peat-fired generation, are regulated. But for the most part, suppliers are free to set their own prices.

Meagre decreases in the bills being sent to householders just won't wash.

It is time that Minister for Energy Alex White again dragged the skin-flint energy suppliers into his office and embarrassed them into delivering proper cuts.

In the meantime, your best bet is to ensure you are not among the 85pc who have never switched supplier.

The best discounts are reserved for the smart 15pc of householders that regularly switch supplier.

Discounts of up to 26pc are on offer for those who move.

Charlie Weston tweets at @CWeston_Indo

Sunday Indo Business

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