Irish consumers can expect to see cheaper energy bills in the coming months if the current wholesale price trends continue, ESB’s chief financial officer has said.
“We have seen moderation and much more stability in wholesale prices in the first six months of this year. They are still very high by historic standards – they’re still almost three times the levels they were prior to the crisis – but if that positive trend continues I think customers can expect to see further progress in terms of price reductions,” Paul Stapleton said.
He was speaking as the State-owned energy utility reported a record half-year operating profit of €676 million for the six months to the end of June.
The headline figure was 30 per cent or €157 million up on the same period last year and came on the back of “higher energy margins” earned in the group’s UK generation and trading business and the “improved performance” of its British energy supply arm, So Energy.
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Mr Stapleton said the company’s increased profitability was primarily driven by strong operating margins at its Carrington power plant near Manchester, which benefited from higher wholesale prices and favourable hedging.
“We’re very conscious in announcing healthy profits when prices are very high for customers,” he said, noting that ESB could not subsidise its retail arm Electric Ireland to offset prices for customers here as it was forbidden from doing so under the terms of its licence.
Earlier this month Electric Ireland, the largest player in the electricity market here, announced a 10 per cent cut in domestic electricity prices and a 12 per cent reduction in gas charges while hinting that further price reductions were on the way.
The move comes in the wake of criticism that energy companies here were not passing on falls in wholesale energy prices, which some have linked the poor hedging policies.
Mr Stapleton, however, insisted the relatively high price of energy in Ireland related primarily to the country’s reliance on natural gas, the price of which rose steeply during the crisis, and higher transmission costs linked to the dispersity of population.
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In an interim financial statement published on Tuesday, ESB said the strong financial performance enabled the company to invest €779 million of capital expenditure – an increase of 46 per cent on the same period last year- in critical infrastructure.
“It remains crucial that ESB continues to earn sufficient profits to allow us to support the increased investment required to deliver a future powered by clean electricity,” Mr Stapleton said.
“This increased level of investment is required to ensure a reliable and sustainable electricity system as we transition to net zero. During the first six months of 2023, ESB invested €779 million of capital expenditure to support energy security and to lower the carbon intensity of our networks and our generation portfolios,” he said.
“These results, and the sustained financial stability of ESB, provide the basis for continued strong investment in a cleaner and more resilient energy future in line with the company’s strategic ambition of net zero by 2040.”
