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Dublin: 3°C Thursday 9 December 2021

Role of energy regulator questioned after Bord Gáis price hike

The CER has been condemned for “disregarding” warnings regarding domestic gas prices and instead granting a higher-than-anticipated price increase.

Image: Yui Mok/PA Archive/Press Association Images

THE ROLE OF the energy regulator has been called into question following a gas price increase of 8.5 per cent for domestic customers.

Fianna Fáil’s spokesperson on Energy Michael Moynihan TD said that the performance of both the Commission for Energy Regulation (CER) and the Department of Communications, Energy and Natural Resources had been called into question by the increase.

Last July, Bord Gáis Energy sought permission from the CER for a 7.54 per cent rise in residential gas tariffs from October due to higher commodity costs and network tariffs.

At the time of the application, the CER vowed it would only allow the agency to pass on costs to customers if such costs were “efficiently-incurred”, and commented that – if granted – any gas price rise would be given “with regret” due to the current difficult economic climate.

However, the CER has instead granted a 8.5 per cent price increase – a full 1 per cent greater than that sought by Bord Gáis Energy in its application.

“That Bord Gáis has been granted a price hike of almost 1 per cent over what they asked for raises serious questions about the performance of the energy regulator,” said Moynihan. “Over the past 12 months, Bord Gáis has been able to increase its gas prices by a whopping 30 per cent”.

He added:

The role of the regulator must be to protect the interest of consumers and act as a break on the price hiking instincts of the utility company. Incredibly in this case, the state regulator has not only acceded to the utility’s request but went above and beyond the price increase sought. This raises serious marks about what interaction there has been between the Department and CER.

Meanwhile, the Society of St Vincent de Paul (SVP) has condemned the decision to raise gas tariffs following the increase of 21.72 per cent granted last year, saying that both of these increases “compound an unfolding crisis in the household energy market”.

The SVP reports seeing a significant increase in expenditure on assisting households with their energy costs: the society spent €3,378,000 in 2007 in helping homes warm and avoid disconnections. That spend rose to an “alarming” €8,848,000 in 2010, it said.

SVP said it had made a “strong submission” to the CER requesting it not to grant any price increases to Bord Gáis, saying that any such increase would “seriously affect many households already struggling to meet living costs and warned that it will increase energy poverty and could leave families without adequate heat in their homes in the winter.”

It noted disappointment that CER disregarded their warning and in fact granted a higher-than-anticipated increase.

“The increase of 8.5 per cent in gas prices to Bord Gais will undoubtedly cause serious difficulties,” said John-Mark McCafferty, Head of Social Justice.

Bord Gais was using a drop in consumption of gas as one of the reasons for the increase sought. This drop is due to the economic recession and people not being able to afford gas supplies – yet a reduction in energy demand is one of the objectives of Government. Increased prices will force a further reduction in consumption. Where does this price increase leave Government’s Affordable Energy Strategy?

“The ‘seasonal aspect’ as described by CER of this price increase on families and individuals, old and young, facing cold homes this winter, needs to be given equal ‘seasonal’ consideration and action by Government to meaningfully tackle fuel poverty,” McCafferty added.

Read: Bord Gáis planning 7.54 per cent price hike>

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