Energy prices are unlikely to return to low levels seen in 2020 and 2021, the energy regulator has said, but customers should see some benefit from falling commodity prices in the coming months.
In a new report, the Commission for the Regulation of Utilities (CRU) said wholesale prices remained higher than normal, with the European Union importing more expensive liquefied natural gas rather than Russian pipeline gas.
Supplier hedging had also resulted in a lag in passing on price cuts to consumers, but had also reduced the impact of higher prices in 2022 on consumers, too.
“This market monitoring has shown the huge challenges that high prices have caused for customers, particularly in the terms of higher levels of debt in electricity and gas,” commissioner Aoife MacEvilly said. “At the same time, the data has shown that the market is functioning and that hedging by suppliers has reduced the worst impact of the unprecedented volatility in global gas prices we have seen in the last 18 months.”
The report, which was requested by the Minister for the Environment, Climate and Communications, Eamon Ryan, examined supplier hedging practices and pricing strategies in the energy market. It said there was no current evidence of windfall profits in the retail market sector, nor was there a failure of competition or customer choice.
The State is also overhauling its energy infrastructure to reduce reliance on fossil fuels, which is also adding to bills. The CRU said it “fully supports” the investment as being in the best interest of consumers.
The CRU made a number of recommendations, including more targeted measures to support customers in debt, and the promotion of so-called time-of-use tariffs, in addition to a review of Irish energy prices compared with European Union charges.
“The CRU now expects that while prices may not reduce to their previous levels, customers should start to see some benefit of the falling prices. Customers should also consider switching or talking to their supplier to see what reductions they can offer. In particular, smart time-of-use tariffs now offer the best value in the market,” Ms MacEvilly said.
“The CRU will continue to monitor the marketplace to ensure it continues to function as it should and has made several recommendations to address the coming winter period and further into the future to ensure that customers remain protected.”
The report will assist the Government to make decisions on future supports required ahead of the forthcoming budget and winter, with a particular focus on ensuring the most vulnerable are protected, Mr Ryan said in response to its findings.
The Government, aware of the impact that recent increases in global energy prices had on households, had prioritised action to support people last winter, including a series of €200 electricity credits, he added.
He added: “I am committed to ensuring the customer remains a central focus in all Government policy measures, while simultaneously driving forward the changes needed to ensure a just and secure transition to a low-carbon future. My department looks forward to working with the CRU to implement the recommendations of this report.”
Mr Ryan urged the CRU to continue to protect customers and to engage closely with suppliers on further energy price reductions to ease pressure on households.
Asked whether people had to face up to the new reality of never being able to go back to a time of cheap energy, Mr Ryan said no one could predict the price of gas in three years’ time.
But the CRU analysis was useful, he believed, especially in explaining the hedging process which “did shield consumers in some ways. It’s not all downside”.
If customers were experiencing difficulties with their bills it was important that they contact, and keep in touch with, their energy suppliers, he said. “There are a range of supports available to help people who may be having difficulty with their bills. In addition, organisations like Mabs and Alone can provide advice and support to help people manage their accounts.”