Electric Ireland customers could see their energy bills increase by a further 30 per cent in the coming months, an Oireachtas committee has heard.
The energy supplier’s pricing and trading manager David Vickers said much of the increase in wholesale gas prices had already been passed on to customers, adding that it was “difficult” to say what will happen to the market.
He made the comments in response to questions from Social Democrat TD Jennifer Whitmore who asked when customers will see the impacts of hedging expiring in their bills.
“We’ve mostly hedged against that but not all the way,” Mr Vickers told the Environment and Climate Action Committee on Tuesday.
“I would say a large portion of the movement we’ve seen in the markets over the last 18 months have already been passed through to customers.
“And the reason why the whole amount hasn’t been is through hedging.”
Ms Whitmore questioned Mr Vickers about what it would mean for the average bill.
He told the committee the market is up about 300 per cent in electricity, not gas.
“Electricity usually makes up about half a bill so half a bill will be 150 per cent. And prices have gone up by about 120% of the 150% at this point,” he said.
Asked by Ms Whitmore whether that means customers could face a 30 per cent rise, Mr Vickers replied that was a “function of the market” at present but added he could not say whether it will definitely happen.
“The markets moving, it’s reacting substantially to announcements from Ukraine, European gas supply concerns,” Mr Vickers added.
“I can’t say it will happen. In fact over the last number of days, it’s fallen a little bit. The previous week it had gone up a little bit, so it’s really difficult to say.”
The committee also heard that Electric Ireland had “no choice” but to increase prices after international wholesale gas prices rose by more than 1,000 per cent.
Executive director Pat Fenlon said the “unprecedented” increases in gas prices means annual costs are set to rise from €300 million euro two years ago to €2 billion this year.
He added that Electric Ireland was “very aware” that increased prices are “difficult for customers to absorb” and that disconnections will always be a “last resort”.
“Over the last year the significant increases in customers’ bills have been driven by extraordinary and sustained increases in the wholesale price of electricity,” Mr Fenlon told the committee.
“Increases in wholesale electricity prices in Ireland have been driven primarily by unprecedented increases in wholesale gas prices in Britain and across the EU, driven by concerns over European gas supply, made much more acute because of the conflict in Ukraine and reduced Russian gas supply.
“Wholesale gas forward prices have increased by over 1,000 per cent over the past 18 months. This is an unprecedented level of increase.
“Two years ago Electric Ireland’s annual wholesale energy costs were in the region of €300 million. At current market levels we expect that cost to be increased to around €2 billion.”
In his opening statement Mr Fenlon also said: “As we operate as a standalone energy supplier in the market, we have no choice but to increase our prices given the quantum of increases in our costs.
“ESB’s generation and supply businesses are required to operate separately so increased profits from ESB’s generation business cannot be used to offset costs incurred by Electric Ireland.”
Mr Fenlon also said the supplier engages with any residential customer who has difficulty paying their bills, and “works with them to put in place a manageable payment plan where required”.
“Disconnections are and always will be a last resort,” he said.
He added that there is a regulatory moratorium on disconnections for the winter period for vulnerable customers.
Electric Ireland has more than 1.1 million residential electricity customers and over 700,000 residential gas customers.
It recorded an operating profit before exceptional items in the first half of this year of €357 million, compared with an operating profit of €363 million in the first half of last year.
