Pinergy's 'very welcome' electricity price cut to put pressure on other suppliers

Energy suppliers will come under pressure to start cutting their tariffs after Pinergy announced a second decrease to its prices.

Finance Minister Michael McGrath on Monday welcomed the price reductions as a “welcome step in the right direction”, saying he expects more energy companies to follow suit.

Pinergy said its standard residential electricity prices will drop from October 1 and will result in a 9.5% decrease to the typical household bill. Pinergy already cut its tariff in March.

CEO Enda Gunnell said the reduction follows an easing of electricity pricing in the wholesale market in recent months.

Figures from the Central Statistics Office (CSO) show wholesale energy prices across the whole economy fell by 5.2% in July from the same month last year, marking the largest fall in annual wholesale inflation for over two years. The CSO highlighted the sharp fall in electricity prices, which meant that wholesale electricity costs were 64% down from July 2022, and “lower than any time during the past two years”.

However, Mr Gunnell warned the energy crisis has not gone away and wholesale pricing remains inflated and volatile.

"We continue to urge policy makers to invest in market reforms of the energy sector to accelerate the energy transition for all."

Reacting to the news in Cork, the Finance Minister also said energy credits will still be included in the budget given the ongoing volatility in international energy markets.

Mr McGrath, who 10 days ago told the  Irish Examiner that he expected to see household energy costs fall over the coming weeks, said the reductions are "very welcome news for consumers".

“And we do expect that over the coming weeks we will see further positive announcements by other energy companies by way of price reductions.

“That said, the international energy market remains quite volatile. While we have seen reductions in wholesale prices, we're not yet anywhere near the level that we were pre the war in Ukraine.

“So the outlook does remain uncertain for households, for businesses over the months ahead.

And that is why we do anticipate as part of the budget that the Government will be providing some additional support, because of the volatility, the uncertainty, but this is a welcome step in the right direction.

“We would expect further announcements by other energy companies over the weeks ahead.” 

Previously, Mr McGrath said the Government had developed a “good model” last year around the introduction of energy credits worth some €600 to households as part of a wider package of measures which were designed to ease the impact of the energy crisis on the public in the wake of the war in Ukraine.

But with six weeks to go before Budget 2024 is unveiled, energy companies have been criticised for not yet passing on to consumers the reductions they have seen in wholesale energy prices since the start of the year.

Meanwhile, Darragh Cassidy of price comparison website Bonkers.ie also welcomed the move by Pinergy and said he expected other energy suppliers to announce similar price decreases over the coming weeks as their hedging strategies further unwind and they buy electricity at today’s slightly lower wholesale prices. 

"However wholesale electricity prices in Ireland are still around three times normal levels," he said. "So there’s a limit to how far prices for consumers can drop for the time being. And there’s going to be no energy ‘price war’ or a return to even remotely normal energy prices for this winter.

Mr Cassidy said Pinergy's second price cut brings its standard unit rate is over 41c including VAT. "This compares to an EU average of around 26 cent," he said. "It’s going to be another very expensive winter to heat and light our homes."