LAST UPDATE | 21 Apr 2023
THERE WILL HAVE to be “further and sustained” reduction in wholesale electricity prices before consumers see a reduction in bills, an expert has said, despite the price of wholesale electricity prices being 50.5% lower than it was a year ago.
Figures published by the Central Statistics Office (CSO) today show that there has been a decrease of 8.7% in the price of wholesale electricity since February of this year.
The price of electricity was 50.5% lower in March 2023 when compared with March 2022, when the war in Ukraine began.
Despite the drastic drop in wholesale prices since this time last year, Daragh Cassidy from price comparison website Bonkers.ie has explained that it may be some time before consumers see a reduction in their bills.
Cassidy said that wholesale prices are still over 300% above normal levels.
“To put things into perspective, household electricity prices have gone up by around 100% to 150% depending on your supplier since late 2020,” he said.
He explained that energy suppliers buy their energy for delivery at different times throughout the years, and sometimes up to 12 to 24 months in advance through hedging.
Cassidy said the price households pay for their gas and electricity is usually an average price of the cost of energy on wholesale markets over the course of around a year or two.
“This is to ensure security of supply and to try ensure households aren’t faced with extreme swings in the price of their energy on a weekly or monthly basis,” he said.
So you can’t really try a direct line between the wholesale price of energy on a given month and retail prices.”
Cassidy said consumers will “need to see a further and sustained reduction in the price of energy on wholesale markets before we can talk of smaller bills for consumers”.
He noted that 2023 shouldn’t see further gas or electricity price hikes.
“I’m hopeful, if the current trend continues, we might see some small price decreases in the second half of the year,” he said.
“However, any further escalation of the war in Ukraine could put upward pressure on prices again,” Cassidy said.
“As could a calm, very warm summer. A good summer would usually mean less wind output which wouldn’t be good for electricity prices. And if there is an extreme heatwave on the continent, leading to drought conditions, this could impact hydro plants and nuclear plants which in turn would then indirectly affect us.”
The CSO figures released today also showed that domestic producer prices for manufactured goods were on average 9.2% higher in March 2023 compared with a year earlier, while producer prices for exported goods increased by 1.1%.
Producer prices for food products rose by 5.2% in the 12 months to March 2023, while the food products, beverages & tobacco index also saw an increase of 5.2%.
Some of the most notable changes in producer prices for food products over the 12 months to March 2023 were: Fruit & vegetables (+18.2%), fish & fish products (+17.5%), dairy products (+15.4%), and grain, milling, starches & animal feeds (+11.6%).
The most notable changes in other producer prices in the year were: Other non-metallic mineral products (such as glass, ceramics, cement, concrete and stone) (+17.8%), wearing apparel (+8.8%), wood & wood products (+7.5%), and furniture (+7.3%).
Wholesale prices for construction products decreased by 0.1% in the month but increased by 13.5% in the 12 months since March 2022.
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