Prepay Power price hike likely to be only the start

The news that Prepay Power is to hike the price of its electricity and gas by an annual average of about €170 is as unsurprising as it is depressing.

Almost as soon as the US and Israel launched their attack on Iran at the end of February, energy price hikes much closer to home became inevitable, and while Prepay Power’s 180,000 electricity customers and its 60,000 gas customers will be the first to feel the pain, they will most certainly not be the last.

The price of oil on global markets soared to its highest level since 2022 this week, with a barrel of crude now about 50 per cent more expensive than it was before the conflict started, while wholesale gas prices have jumped by a similar margin.

Irish consumers will end up paying the price sooner rather than later, just as they have already been paying the price on fuel forecourts and when it comes to home heating oil.

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It is to PrePay Power’s credit that the increase is its first in more than three years – when other companies were upping their prices last winter by between 10 and 15 per cent, it kept its powder dry. So too did its sister company Yuno Energy, while Electric Ireland also announced a “price freeze” for the winter months just gone.

It seems likely – if not inevitable - that Electric Ireland will follow PrePay’s lead in the days ahead, with its 1.1 million customers facing a price increase.

While it is too soon to say by how much, anything less than 10 per cent might be considered, if not a win, then at least moderately acceptable in the current geopolitical climate.

That is not to say it will be welcome. A 10 per cent hike in the cost of domestic energy will add more than €300 to a typical household’s bills, and that is an after-tax figure, with many having to earn €600 to cover the cost.

That might not be the end of it, either. All the other companies will be under pressure to increase their prices too, and before the cold and dark days of winter return we might well see multiple price-increase announcements which will be nothing but bad news for consumers and the wider economy.