Subscriber OnlyYour MoneyAnalysis

Q&A: Energy prices are going down. Here’s what consumers need to know about it

Electric Ireland has made a further price cut, with other providers expected to follow suit. But the market is volatile and prices are still high compared to 2021

Put the kettle on again - electricity prices are coming down. But will they keep coming down? Photograph: Bryan O'Brien/The Irish Times

Conor Pope's face
Conor Pope
Mon Jan 15 2024 - 19:06
Energy prices are on the way down, are they?

They are and – all things being equal – they should continue on this downward trajectory for the rest of the year.

What do you mean, ‘all things being equal’?

The cost of oil and gas on international markets is the main driver of prices at a domestic level and it can be extremely volatile. A huge amount depends on what is happening at a geopolitical level, and a shake-up in pricing projections can happen virtually overnight.

In late 2021, prices started to climb all over the world because of soaring demand in the post-pandemic period, and that spike was dramatically exacerbated early in 2022 following Russia’s invasion of Ukraine. While the markets have stabilised over the last 18 months as EU countries have successfully sourced energy from locations other than Russia, the conflict in the Middle East and the potential for an escalation could send prices soaring again.

Can we focus on the good news for just one second? All the providers here have lowered their prices, right?

Yes. Over the last six months price reductions have been rolled out across the board but only two of the larger companies have done so twice. In December SSE Airtricity announced a second price cut in just four months, with the cost of its electricity falling by almost 13 per cent and its gas prices falling by 11.5 per cent. Electric Ireland cut its prices for a second time this week; from March 1st its electricity will be 8 per cent cheaper while its gas customers will pay 7 per cent less. The relatively small player Yuno Energy has already lowered its prices.

READ MORE
What about the others?

The competitive nature of the Irish market and past evidence would suggest that Flogas, Energia and Bord Gáis Energy won’t be long in cutting their prices, although the exact timing of any announcements remains unknown.

I have just signed a contract with Electric Ireland. Will I get the discounted rate too?

Yes – all rate cuts are passed on to all customers automatically. There is no need to do anything on that score.

How much money will I save?

That very much depends on your usage and the company you are with. Electric Ireland have said that customers who get both electricity and gas from it will stand to benefit by close to €300 as a result of the latest price cuts. When the price cut from late last year is added to the mix, the annual savings for a dual fuel customer will come in at close to €700. A person who uses more energy will stand to save more.

[ From mortgage rates to energy prices, how will 2024 look for Irish consumers? ]

€700! That is amazing, isn’t it?

It is not as amazing as it may sound. Most people have seen their energy bills double over the last couple of years and that means that a household that spent €2,000 on gas and electricity in 2020 saw it climb to €4,000 by 2022. A fall in price of €700, while welcome, will take the annual cost of their energy to €3,300, which is still substantially more than the cost of just a few years ago.

And will this be it for price falls?

All things being equal (again), the answer should be no. Wholesale gas and electricity prices still appear to be on a downward curve and if there is no great upheaval we should see prices fall by around 10 per cent later this year, probably as we head into the autumn. That would see prices – when spread over a year – reach an average of around €3,000 – both better and worse than it was.

  • Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
  • Find The Irish Times on WhatsApp and stay up to date
  • Our In The News podcast is now published daily – Find the latest episode here
LATEST STORIES