Business Personal Finance

Tuesday 20 March 2018

Energy companies accused of 'profiteering' on household bills

Seeking explanation: Energy Minister Alex White. Photo: Tom Burke
Seeking explanation: Energy Minister Alex White. Photo: Tom Burke
Charlie Weston

Charlie Weston

Energy companies have been accused of profiteering after it emerged wholesale gas prices are at a six-year low.

Energy Minister Alex White said he was considering again calling electricity and gas suppliers into his office to demand answers to why residential prices are not falling much faster.

But consumer campaigners warned the minister was wasting his time.

It came after figures showed the cost of wholesale gas, the main input for generating electricity and for producing domestic gas, has collapsed.

The average wholesale price for January is now 40pc lower than the average monthly price for the same month over the previous three years, experts at energy suppler Vayu Energy said.

In the last year alone, prices are down 29pc, Joanne Daly of Vayu said. But electricity and gas prices charged to householders fallen by only 5pc in the last year, knocking up to €50 off bills.

Strong supplies, mild winter weather conditions and high quantities in storage are behind the plummeting cost of wholesale gas.

No energy companies are regulated on the price they charge consumers now that the market dominance of ESB and Bord Gáis has receded.

Deputy chairman of the Consumers' Association Michael Kilcoyne accused energy suppliers of "profiteering".

He said it was a waste of time for Mr White to call them into his offices to push them to reduce prices.

"He needs to just tell them he wants cuts. The failure of energy firms to pass on wholesale gas cuts is profiteering," Mr Kilcoyne said.

Mr White said he had no powers to set prices, so could not tell companies what to charge. But he was considering asking the main suppliers into his offices to explain their reluctance to pass on price cuts, he told RTE radio. "It is important that energy prices are kept low. I would expect more reductions," he said.

Simon Moynihan, of price comparison site, said there was scope for cuts of at least another 5pc.

"Suppliers have argued that they buy gas years in advance and wholesale prices can take a long time to pass through to customers. However, wholesale prices have been falling for years now, which should lead to greater cuts than we have seen to date."

He warned families not to wait and hope for suppliers to cut prices further.

They should take the savings themselves by switching to benefit from discounts of up to 26pc, he said.

Asked whether it was profiteering, Electric Ireland said fuel costs represent around 30pc of the overall price of electricity, but said it took time for wholesale price change to feed into customers' bills. It applied a 3pc reduction in unit rates in November.

"We continue to keep our prices under review and customers can look forward to further reductions if the current wholesale energy price trends continue."

Bord Gáis Energy said it was the only energy supplier to pass on two price reductions, in both gas and electricity, in 2015.

Irish Independent

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