Families could see their energy bills rocket this winter after Electric Ireland announced a price hike.
Consumer groups now fear it could ‘open the floodgates’ to further rises, leaving households struggling to pay their bills this winter as they spend more time in the home and on fuel.
Electric Ireland is pushing up costs by €35 a year for its 1.1million customers, and the increase has sparked fears it could kickstart a round of market-wide price hikes.
A spokesman for price comparison company Bonkers.ie said: ‘It really opens the floodgates now for other electricity providers to follow suit and it’s not a good thing going into the colder winter months. But the one thing consumers can always do to offset that price increase is switch.’ He said that while the Electric Ireland rise is ‘not a good sign’ he believes it ‘does remain to be seen’ what others will do.
The increase is a double whammy for families with the Public Service Obligation (PSO) levy – which is added to all bills – set to rise by 123%, adding an extra €44 a year (on the PSO levy element) to bills. The levy is a Government subsidy that is charged to all electricity customers in Ireland. Yesterday Electric Ireland, which is the dominate player with about half the market, announced the 3.4% increase, which equates to about €2.88 a month – or €34.56 – for the average residential electricity bill. Electric Ireland blamed the price rise ‘on recent costs impacting the broader electricity system and market’. But the increase comes as the official inflation rate shows prices are falling – down by 0.4% over the past 12 months.
In fact, the CSO figures show electricity prices are down by 2.7% and natural gas – which is used to generate about half the country’s electricity supply – is down by 7.2%.
Consumers’ Association of Ireland chief Dermott Jewell said: ‘We know health insurers are starting to consider how much they are going to put their premiums up by, all the banks have applied to the Central Bank to increase their charges and now we’re seeing electricity, there’s a strong possibility gas and and others will follow. It presents an opportunity and a valid reason to consider switching. ‘There are many people who are struggling, who are unsure what their job prospects are so it’s a good opportunity for the future by saving yourself some money with relative ease,’ he said. ‘You can do this online, it’s not too hard.’
Electric Ireland’s Marguerite Sayers said: ‘We always try to offer our customers a very competitive rate by keeping our standard rate as low as possible. In April, we reduced energy bills for gas and electricity customers by circa €100 annually because fuel costs were falling at that time.
‘Unfortunately, due to other electricity system and market costs outside of our control, we now have to increase our electricity prices from October 1. On a positive note however, we are freezing gas prices through the winter period as we have done in previous years. Gas prices were already reduced by 11.5% in April, which means a continued reduction of €78 on an average annual gas bill.
‘We also have one of the lowest standard rates.’ The Bonkers.ie’s spokesman said the announcement will come as a surprise to many customers, considering Elec-tric Ireland only announced a reduction on both its gas and electricity prices at the beginning of April.
‘The increase of 3.4% will join the increase in the PSO levy of €96.24 per year in what is a double-whammy of price increases for consumers. The supplier is blaming increased charges by the network operator for the price increase passed on to consumers, which leaves the door wide open for other suppliers to raise their prices coming into the colder winter months.’
Rival switching site WeSwitchU.ie’s Brendan Halpin said: ‘This is unwelcome news for the Irish consumer given that the PSO levy increase is happening in the same month and usage will start to increase as we come into winter. Unfortunately, when one provider increases its rates, others follow suit.
In response a spokesman for SSE said yesterday: ‘We keep our prices under review.’
Bord Gais had no announcement on prices and a spokesman for Energia was unavailable for comment.
A spokesman for PrePay-Power also said it kept its ‘prices under review’.