Customers of Energia are being hit with electricity price increases of up to 12 per cent with almost immediate effect in a move that is likely to cost many households more than €200 a year.
It comes as Energia’s majority owner, New York investment firm I Squared, is courting bidders for the business. The utility group was valued at €2.75 billion by industry sources when a sale was first mooted early last year. However, Energia’s strategy of paying large dividends may affect the final price.
Energia is the third energy company to announce price increases this year. It said the price changes - which kick in on October 9th - were “now unavoidable” as a result of ongoing, substantial increases in electricity system operator and network charges.
It said the regulatory approved non-energy charges, which are applied to electricity suppliers, “are required to recover the costs of ensuring security of supply, addressing network constraints and investing in the electricity grid”. It added that the “expenditure is needed to ensure reliability, efficiency and decarbonisation of the electricity supply in Ireland”.
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Energia electricity customers will see a 10.9 per cent increase to the average annual bill which equates to €3.94 per week.
Its dual fuel customers will see a 6 per cent increase to the average annual bill which equates to €3.92 per week.
Customers on Energia’s Smart Meter electricity plan will see a 12.1 per cent increase to the average annual bill which equates to €3.73 per week while those on Smart Meter dual fuel plans customers will see a 6.2 per cent increase to the average annual bill which equates to €3.71 per week.
I Squared hired investment advisers Barclays, Morgan Stanley and Santander last year to manage the Energia sale, dubbing it Project Havana.
It reportedly whittled bidders down to four in June, comprising a joint-venture between the UK’s Octopus Energy and Canada Pension Plan Investment Board; US private equity giant KKR; Japanese trading house Itochu; and the Czech energy firm EPH, which is controlled by businessman Daniel Kretinsky, co-owner and president of football club Sparta Prague, and major shareholder of West Ham United.
A preferred bidder is expected to be selected within the next month or so, according to observers off the process.
Financial figures published by Energia in recent days show that earnings before interest, tax, depreciation and amortisation (Ebitda) in its customer solutions business – which supplies electricity and gas to 898,500 households and businesses on the island – declined by 31 per cent on the year to €30.2 million as its margins contracted in the three months June. That is its fiscal first quarter.
Ebitda in the renewables business, which owns 358 megawatts (MW) of wind assets and purchases electricity from 1.19 gigawatts (GW) of third-party green energy producers, fell 9.5 per cent to €18.1 million. Its flexible generation unit, mainly made up of two combined cycle gas turbine plants in Huntstown in north Co Dublin with a total capacity of 747MW, posted a 47 per cent slump in earnings, to €7.8 billion.
Still, Energia handed €40 million of dividends to its owners in April, weeks after they pressed the start button on a sale of the business. That brought brings total distributions to more than €540 million since the I Squared bought Energia, then known as Viridian, in 2016 for €1 billion.
