What’s going on with electricity prices?

The Independent Energy Suppliers of Ireland (IESI) want the ESB and Eamon Ryan, Minister for the Environment, Climate Action and Communications, to answer serious questions on recent power price hikes. The new organisation followed a call by Fianna Fáil TD Barry Cowen for an investigation of rising energy costs.

What did Cowen mean when he accused the ESB of price gouging in the Dáil?

Cowen highlighted that he had figures showing consumers paid an extra €250 million in the three months to September 30th because ESB power plants earned “super-normal profits” from selling electricity on the wholesale market.

Why was this?

Temporary and permanent power plant shut downs plus low wind speeds, which hit renewable electricity production, meant the ESB’s plants had an extra large share of the market.

What’s the “wholesale electricity market”?

The wholesale market is the market where power plants sell electricity to suppliers, including ESB subsidiary Electric Ireland, Airtricity, Prepaypower and others, who then provide it to homes and businesses. The system governing it is meant to favour the cheapest players.

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So how does that affect consumers?

Ultimately the cost of wholesale electricity is passed on to customers. As that has been rising, suppliers have increased their costs.

Who, or what, is the Independent Energy Suppliers of Ireland?

A new group, founded by Naturgy, Panda and Prepaypower, to represent independent operators’ interests. Recent prices hikes partly prompted the move.

Isn’t there a regulator to oversee this and what role does the minister have?

Part of the Commission for Regulation of Utilities’ role is to ensure that customers pay reasonable prices for their electricity. The Minister for the Environment does not have a direct role in electricity supply as it is an open market. However, he could ask the regulator to investigate what has been happening to establish if anyone is making super normal profits.

What is the ESB saying?

The ESB blames surging gas prices on world markets. The fuel is used to generate more than half the electricity we use. It says that during the three months highlighted, its wholesale prices were 25 per cent lower than the market average.

Where does it go from here?

At this point, it looks like electricity prices will be high for some time to come. The Government has promised to knock €100 off every household’s first electricity bill in 2022, but the long-term problems remain.