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Dan White: Only way to get your gas bill down is to get politicians involved

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Petroceltic

Petroceltic

Petroceltic

Has your gas bill gone down this month?

Didn't think so. Gas and electricity companies aren't passing on lower prices to their customers.

Despite a 30pc fall in commodity prices over the past year, consumers have yet to see any reduction in their bills.

Most of us have heard of the fall in crude oil prices, down by a half in dollar terms since last June.

What most people are less aware of is that the price of natural gas, the main determinant of retail electricity and gas prices, has also fallen sharply.

Natural gas is different to crude oil. It is difficult to store and is generally transported by fixed pipelines rather than tankers.

This means that while there is a single global market for crude oil, the natural gas market is much more fragmented with prices in Europe often varying widely from those in North America.

Further complicating matters is the fact that the demand for natural gas is much more seasonal than it is for crude oil.

The use of natural gas soars from October onwards as the Northern Hemisphere winter sets in and consumers turn on their central heating and falls off just as quickly again from late March as temperatures rise once again ahead of the summer.

fall

However, even when all of these factors are taken into account, natural gas prices have still fallen significantly.

London natural gas prices, which ultimately determine the price paid by Irish gas and electricity suppliers, have dropped by more than 30pc in sterling terms over the past year.

This of course begs the question: why have Irish households not seen any of the benefits?

Gas and electricity prices used to be regulated by the Commissioner for Energy Regulation. However, retail electricity prices were deregulated in 2011 and gas prices in 2014.

All this was supposed to be good news for consumers as deregulation would allow gas and electricity suppliers to adjust their retail prices in response to falling or rising commodity prices.

Except of course that this hasn't happened.

While there has been a major fall in fuel prices with a litre of petrol or diesel now up to 20 cent cheaper than it was last summer, retail gas and electricity prices have, so far at least, stubbornly refused to budge.

With the gas and electricity suppliers refusing to pass on lower natural gas prices to their customers it is difficult to resist the conclusion that deregulation has failed its first major test.

FACING

At a time when consumers are facing their first water bills, dearer health insurance and a second full year of the property tax, this just isn't good enough.

A major reduction in gas and electricity bills would go a long way towards compensating consumers for the losses resulting from these other charges.

At this stage there's only one thing for it. Communications and Energy Minister Alex White needs to get tough with the gas and electricity suppliers.

He should make it explicitly clear to them that if they don't pass on the benefit of lower natural gas prices to retail consumers pronto, he will order the CER to reregulate retail gas and electricity prices.

Household budgets remain under pressure and Irish consumer confidence is still fragile, so such price-gouging is utterly unacceptable.

It's high time the minister was told that gas and electricity consumers are as mad as Hell and we're not going to take it any more.


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