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Oil Prices

Why aren't our electricity and gas bills coming down?

It’s a matter of ‘when’, not ‘if’, according to the energy regulator.

THE DEMAND FOR a reduction in the price of gas and electricity in response to tumbling oil prices is gathering momentum, with the regulator asking suppliers ‘when, not if’ the price will come down.

The chair of the Oireachtas Committee on Transport and Communication wants to bring the topic up when committees resume, planning on calling energy companies ‘to explain their position’.

Suppliers are also offering customers new products.

Oil prices are at their lowest level in several years, but aside from falling prices at the fuel pumps, Irish consumers haven’t felt the knock-on effect in their pockets.

This is due to a number of factors, including the Public Service Obligation levy, where suppliers must recoup the cost of ‘meeting the obligation to purchase electricity generated from sustainable, renewable and indigenous sources’.

Another crucial factor in some cases is that the power is bought months in advance, meaning there is a lag in any fall in price.

Gas prices are also following suit, falling significantly.

Chair of the committee, Fine Gael TD John O’Mahony, said in a statement yesterday that an explanation into the exact reason why prices aren’t falling is needed.

“Over the years we have seen our energy bills increase in direct response to increases in global oil and gas prices,” he said.

By this logic, our bills should come down when the price of oil decreases as it has significantly in recent months. However, up to this point there has been no reduction.

Speaking to RTÉ’s Morning Ireland, Commissioner for Energy Regulation Aoife MacEvilly stressed that prices are no longer being ‘regulated’, but monitored.

She said that CER has been actively engaging with suppliers who haven’t already dropped their standard tariffs.

“Our view is, at this point, it’s a question of when rather than whether they should follow suit,” MacEvilly told the programme.

Electric Ireland and Pinergy have already dropped prices. We think there’s scope out there now for other suppliers to drop their standard tariffs. If we find there are barriers, we are ready to work with suppliers to ensure there are no barriers to reducing [prices].

Other electricity suppliers were contacted yesterday on this issue.

A spokesperson for Airtricity said that an eye is kept on all costs, and if lower costs can be provided, they will be.

“Wholesale prices are volatile and go up as well as down, so we buy energy over periods of time to flatten this out and protect customers for the long term,” he added.

Powerline Donald Lee Pardue Donald Lee Pardue

Bord Gáis Energy said prices are currently being reviewed, and any savings available will be passed on.

Nicky Doran, head of retail at the supplier, noted that a new ‘fixed and fall’ product had been introduced:

This allows customers to lock down their energy costs for two years.  Our new fixed product also guarantees that any new price reduction implemented in the first six months of this year would also be passed on to customers.

This is the first time it has been introduced to the Irish market.

A statement from Energia said that significant discounts are already available, but if more customers switch supplier, it will ‘further market competition and help put  downward pressure on prices’.

This was something echoed by CER, as MacEvilly said this will drive further market competition.

Energia also explained why prices haven’t fallen across the board:

In general, supply companies purchase power 12-24 months in advance so there is a timing lag with actual fuel price movement. It’s also worth noting that fuel costs (primarily gas) only account for an average of 25% of a customer’s bill, with other costs, including Government levies, accounting for the vast majority of the bill

Attempts were made to contact

Explainer: Oil prices have dipped below $50 a barrel. But Ireland could be a winner… >

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