Wholesale gas prices slide 3% keeping up pressure on energy firms to cut utility bills

Pressure on Irish electricity and gas firms to announce further major price cuts for households and businesses increased on Tuesday as European wholesale gas prices tumbled by 3% in the trading session. 

Prices of wholesale gas, which is a key fuel that is used to generate significant amounts of power on the all-Ireland electricity grid, traded on futures markets at below €35 per megawatt hour, as mild winter weather on the continent cut heating demand, while huge storage capacity of the fuel remains at near record levels for the time of year. 

Energy companies buy gas for future needs and lower prices should shortly be passed onto household and business consumers,

The Irish energy firms will continue to face scrutiny. 

Wholesale gas prices have tumbled from as high as €290 per megawatt hour in August last year and were still trading at the elevated levels of €138 per megawatt hour as recently as 12 months ago

Dramatic price reductions on the wholesale market ought to be reflected in utility bills even allowing for the future buying of gas supplies or hedging policies followed by energy generators or providers. 

SSE Airtricity, one of the biggest energy providers with around 750,000 customers in the Republic has confirmed plans for a further round of price cuts. 

The reduction of  12.8% for electricity customers and 11.5% for gas customers will, however, only apply from early next year.

The latest price cut will come into effect on February 1 and could put pressure on other suppliers to reduce their rates as well. 

It is the company’s second price cut in three months following a 12% reduction announced in September which came into effect in November. 

In September, a number of energy providers, including Electric Ireland, Pinergy, Bord Gáis Energy, and Energia, announced price cuts.

According to SSE Airtricity, this latest reduction will see typical dual fuel customers save just over €31 a month. 

An electricity customer will save just over €18 a month while a customer will save over €13 a month. 

Klair Neenan, managing director of SSE Airtricity, said the company has “stayed true to our word” as it continues to pass on savings to customers at the earliest opportunity. 

“We’ve also worked hard over the last couple of years to support our customers as much as possible, with unrivalled financial supports and protections,” she said. 

The two rate cuts by SSE Airtricity will see a dual fuel customer save almost €761 a year, according to the company. 

There was also significant falls in the costs of global crude oil in late trading on Tuesday. 

The price of Brent crude slid almost 4% to $73.13 a barrel, the lowest since June. 

Prices continued to be battered by fresh signs that supplies remain ample. Global oil demand growth is set to slow in 2024 with Opec and the International Energy Agency split on the extent. 

Meanwhile, a recent deal from suppliers group Opec+ to limit supply has continued to underwhelm the market.

"Negative sentiment towards the oil complex is still overpowering at the moment," Kpler analyst Matt Smith said. 

Weak demand and concerns that the Opec+ deal will not do enough to limit oil supply continue to weigh on prices, he added.