Energy bills set to soar as wholesale gas prices double in a year

Customers are encouraged to shop around to mitigate the effect of rising international energy prices on Irish households.

Irish households may be facing record energy bills this winter, as European gas prices have nearly doubled in a year while carbon prices for the energy sector have continued to rise as well.

It comes as three major Irish energy suppliers have announced price rises from September as a consequence of sustained increases in wholesale energy costs in the last year.

The bills of customers of SSE Airtricity, Bord Gáis Energy and Electric Ireland will all rise by between €4 and €12 a month from the beginning of this September. However, it is likely that there will be further energy price increases by suppliers before the end of the year if current trends continue.

While progress on renewable electricity continues, 60 per cent of all electricity is still generated from fossil fuels in a given year, particularly natural gas, so international gas prices are a major factor in the cost of electricity.

According to Paul Deane, an energy researcher at the MaREI Institute in University College Cork (UCC), European wholesale gas prices have almost doubled since February, meaning energy suppliers are having to pay more for the energy they purchase for their customers.

“A number of factors have contributed to this,” Deane said, “including a cold snap across Europe in April which used a lot of gas for home heating that could have gone into summer storage, a warmer summer in Asia which increased the cost of imported gas in to Europe, and maintenance on key gas infrastructure in mainland Europe.

“The upshot of this is record high gas prices in north west Europe as producers rush to fill large gas storage facilities before the winter.”

The Commission for Regulation of Utilities (CRU) said that international energy prices had increased significantly in the last year and estimated the benchmark energy price for the 2021/2022 period is €98.73 per megawatt hour (MWh) compared to €53.66 last year.

“While all suppliers’ end prices are impacted by these commodity prices, the key mitigation action for consumers are the benefits of an open supply market and the competition that this provides is vital in giving choice and value to active consumers,” a spokesman for the CRU said.

“We continue to encourage customers to shop around or renegotiate with their supplier to beat these current increases. An increasing number of customers now have smart meters installed and can consider whether Time of Use tariffs may save them money.

“In addition to this, there are a wide range of customer protections under the supplier handbook and the supplier-led Energy Engage Code.”