Gas €200 cheaper in the North despite price cut
Published 07/01/2010 | 05:00
HOUSEHOLDERS in the Republic will continue to pay almost €200 a year more for their gas than consumers in Northern Ireland -- even after the 8pc price cut announced yesterday.
The Commission for Energy Regulation announced that Bord Gais prices would come down by 8pc next month, which will save the average household €53 a year on their gas bill, bringing the total down from €737 to €684.
However, that is still 39pc more expensive than in the North, where the average yearly residential bill with major supplier Phoenix Natural Gas is £437 (€491), meaning consumers in the Republic are paying an extra €193.
The Consumers' Association of Ireland (CAI) described the price gap as "outrageous", with no justification whatsoever, and criticised the regulator for approving reductions that fell far short of those enjoyed by householders in the North.
"You could be living across the Border and paying nearly €200 a year more for a basic necessity such as heating -- there's no excuse at all for it," said CAI spokesman Michael Kilcoyne.
Bord Gais managing director David Bunworth defended its higher prices on the basis that Irish VAT rates at 13.5pc were higher than the 5pc rate in the North, while they had to serve a much more dispersed area than Phoenix, which only supplied Belfast.
Bord Gais was also subject to strict regulation over how it bought gas to prevent volatility whereas Phoenix was permitted to buy in large blocks.
This meant prices in the North could shoot up if world prices spiked, as was shown by the 75pc increase in Phoenix charges between 2006 and 2008 which was way in excess of the 40pc increase in the Republic, said Mr Bunworth.
"There is no profiteering here, we operate on a 2pc margin and the regulator has full access to our books," he added.
The Commission for Energy Regulation (CER) said that the latest price cuts would take effect from February 1 and would apply to all residential and small- and medium-sized businesses.
The CER's decision to reduce prices came after a review of international gas prices and sales volumes for Bord Gais and a public consultation, with exchange rate changes also taken into account.
The commission had also looked at electricity prices but considered no price reductions were needed at the moment, although there would be a detailed review of this in the summer, a spokesman for the regulator said.
Fine Gael called for cheaper electricity and public transport prices to follow the gas price cuts. "The regulator's decision to cut gas prices is a welcome break for businesses and households, who have had to pay over the odds for far too long," said FG enterprise spokesman Leo Varadkar.
Irish gas prices are the eighth highest in the European Union according to the latest Eurostat survey, which looks at prices in the first half of 2009.
Meanwhile, home heating oil prices have risen by 15pc since September, which the industry said was down to increased demand in the cold weather and in expectation of global economic recovery.
The Oil Firing Technical Association said that Irish retail prices were up 15pc since last September, but were still well down on their level in 2008.