Irish consumers could benefit by more than €400 a year if energy companies passed on dramatic falls in both oil and gas prices on international markets over the past 12 months.
A new report by Irish gas and electricity supplier Vayu Energy shows that consistently strong supplies and reduced demand across Europe have caused the Republic's wholesale gas prices to fall 30 per cent year on year while an 8 per cent fall has been recorded since the start of the year alone.
Wholesale energy prices typically make up about half of a domestic user’s final bill so, based on current prices, the final cost to consumers this year should be about 15 per cent less than last year.
If savings being made by wholesale purchasers are passed on to domestic customers, bills could fall by about €400 this year.
Temperature drops
European gas consumption is at the lowest it has been since 2001. Brief temperature drops below seasonal norms across
Ireland
and Britain this month led to a boost in gas demand for heating and power generation, but supplies were more than sufficient to cope.
In addition to surplus supplies, a sharp drop in crude oil prices in recent months, coupled with weak economic data in larger economies across Europe, is putting increased downward pressure on longer term gas contracts in the wholesale market.
Vayu Energy, which supplies gas to more than 20 per cent of Ireland’s industrial and commercial market, said businesses were already benefiting from the fall in gas prices but the experience was not being mirrored at the domestic level.
Only one Irish utility, Bord Gáis Energy, has passed on the benefit of falling prices to domestic users and even it has only announced a marginal cut which will not be applied until the middle of March.
The dramatic fall in gas prices over the last 12 months has had an impact on the energy costs of many Irish businesses, particularly in the industrial and commercial segment said senior energy analyst at Vayu, Gillian Lawler.
She said when fixed costs such as gas network and regulated fees were factored in, businesses would typically have benefited from reductions of up to 18 per cent.
Price cuts
The failure of domestic energy companies to pass on any savings to consumers has been highlighted by the chairman of the
Oireachtas
transport and communication committee, John O’Mahony, who earlier this month called on the companies to explain why they had been so slow in passing on the price cuts.
Speaking to The Irish Times he repeated those concerns. "The suppliers say they cannot pass on the price falls because they buy so far in advance but they can be very quick to pass on price increases and it seems that some industrial and commercial users are already benefitting from lower prices.
“If they were to pass on the price cuts then it could easily save many households over €300. That is twice as much as the water charges over which there has been so much concern.”
A spokesman for SSE Airtricity defended the company's failure to pass on price cuts.
All companies operating in the domestic market set their own prices and the Commission for Energy Regulation no longer has any role in pricing.
