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Are energy companies ‘profiteering’ on State’s €200 subsidy?

Q&A: Switching providers will not affect you getting the discount you’re entitled to

Are electricity providers profiteering on the back of the Government rebate? My electricity provider recently increased my day rate cost by two cent per unit and the night time rate by one cent per unit.

This effectively negates for me the benefit intended by the €200 credit due in April/May. In light of this I am in the process of switching providers. Is the €200 credit available to me with the new provider since I have no payment history with them, nor means to avail of the rebate with the provider I am leaving?

Ms M.K., email

It’s easy to be suspicious of sudden price increases on the back of Government support for consumers. We saw it most recently with the sudden sharp rise in fuel prices between the Government announcement of a cut in excise and its coming into force on petrol pump prices.

And, to be fair, the reason we are suspicious is that, on occasion, such subsidies have been seen by business as a way of preserving or recovering their profit margins rather than providing respite for consumers.

However, on this occasion, I think the electricity providers are simply battling to cope with hugely volatile markets where prices are moving wildly and mostly upwards.

All providers have increased their prices substantially and several times over the past year or so.

This is down to several issues. Obviously the most immediate of these is the war in Ukraine. Oil and gas markets hate uncertainty and a war in a country through which runs Europe's main pipeline from Russia, a key energy supplier, constitutes serious uncertainty.

That's even before you factor in the the standoff between Russia and its western European customers over supplies. After years of relying heavily on Russia for oil and gas, Europe is now desperately trying to diversify – easier said than done, at least in the short term. For its part, Russia is less than happy about western sanctions and posturing and is demanding payment for energy supplies in roubles from this month.

We will know the outcome of that later in the month but it could even precipitate a shutdown of supplies, rationing across Europe and even higher prices for the supplies that are available.

But it’s not just the war in Ukraine. Even before the invasion, there had been an ongoing game of diplomatic gamesmanship. Russia, which was looking for Europe to approve a rival pipeline bypassing the Ukraine, called Nord Stream 2, had deliberately slowed down off-season supplies which are used to top up European winter reserves.

Europe either wasn’t paying enough attention or simply hoped against hope that, as a good paying customer, Russia would ensure adequate supplies when winter came. That coincided with an unusually calm summer which meant there was much less renewable power coming onto grids, and a post-Covid economic bounce which saw sharply increased demand for energy by business.

Either way, the markets got nervous which is why prices were rising last year well before the invasion of Ukraine.

So, no, energy suppliers are not profiteering to “grab” the Government’s €200.

At it is, there is already widespread acceptance that the €200 will not go far in helping those vulnerable customers – especially older people, those on lower incomes and those living in rural areas – to cope with the rapid increase in their cost of living as a result of the surge in energy prices. It seems inevitable that the Government will have to consider further cost-of-living relief.

None of which should deter you from switching. Irish consumers are more inclined to switch energy provider than they are certain other services, such as health insurance or broadband. And they should.

Websites like bonkers.ie and switcher.ie make it easy to compare prices between suppliers.

Inevitably new customers will get better offers than existing ones. Yes, we are all paying more for gas and electricity, but those staying loyal to their provider are paying more again. And at times such as these, when money is tighter, that simply doesn’t make sense.

Finally, don’t worry about getting the subsidy. Whichever company has you on its books when the relief is triggered will pass it on to you. Either way, you will have the €200 discounted off your bill.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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