It did not take very long for the outbreak of hostilities in the Gulf region to have an impact on the pockets of Irish consumers. Some opportunistic home heating oil suppliers have jacked up their prices well beyond any rise in international markets. Consumer oil markets generally react quickly to wholesale market moves, but there is no excuse for profiteering.
Unless oil suppliers are colluding, the powers of the Competition and Consumer Protection Commission to do anything beyond compiling a report is questionable. It might, however, be worth them considering ways to make the market for home heating oil more transparent.
It is inevitable that if the conflict continues for any significant time there will be an impact on global energy prices and Ireland will not be immune. Wholesale prices, which can take weeks or months to feed through into domestic electricity and gas bills, have started climbing. For the time being the rises are nothing like as dramatic as those seen after Russia’s invasion of Ukraine in 2022, but there is little room for complacency.
The extent to which Irish households are vulnerable to energy shocks was illustrated by figures for the number of domestic electricity and gas customers behind on their bills at the end of last year. Published by the Commission for the Regulation of Utilities (CRU), it showed that 14 per cent of households were in arrears.
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When and if consumer energy prices start to rise, the Government will come under pressure to provide supports along the lines of the electricity credits paid in the aftermath of the invasion of Ukraine. This expensive measure – worth a cumulative €1,100 over three years – was discontinued in the last budget. This was correct as it paid a lot of cash to people who did not need it, as well as helping those who did.
In framing any response to high energy costs, it is important to distinguish between domestic energy customers who are chronically in arrears and those who missed one or two payments for a variety of reasons. To this end the CRU published – for the first time – separate data on customers in arrears for more than three months.
By this measure the number in arrears at the end of last year fell from 14 per cent to 8 per cent , pretty much unchanged since last May. It is still a significant number – 191,000 domestic electricity customers and 149,901 domestic gas customers.
Any new measures should be targeted at these vulnerable households. One route is via the two existing schemes; the means tested fuel allowance and the Household Benefits Package. Further options may be outlined in a promised Government energy affordability strategy. A Coalition commitment to review how energy companies pass on wholesale price changes is also awaited. With threats now obvious, these programmes of work need to accelerate.
