You can't escape the energy price hikes but consumers can blunt the edge
Emphasis Bill, Financially Price Increases Captioncredit">picture: Thu, 01 Sep, 2022 - 13:14
The winter of energy discontent beckons. Last week, SSE Airtricity announced that from October 1, its electricity prices will go up by no less than 45.2%, while the unit price of gas will go up by 46.3%.
Its electricity standing charge for both gas and electricity is also going up by 8%. The move will impact around 250,000 electricity customers and 85,000 gas customers.
Then on Wednesday, Prepay Power announced its latest price hikes, adding around €340 a year extra to electricity costs and €430 to gas costs. From October 1, 170,000 electricity customers and 60,000 gas customers will face rises of 19% and 29%, respectively. This will be the third time that Prepay Power has increased its prices this year. This will have a particularly large impact on lower-income families, who would tend to opt more for pre-payment meters.
Now today, Electric Ireland, one of the country's largest suppliers, announced a 26.7% hike in electricity bills and a 37.5% increase in gas bills from October 1. This will add €37.30 per month to the average electricity bill and €42.99 per month to the average gas bill.
According to independent price comparison and switching site, Bonkers.ie the increase will add almost €600 a year to the average customer’s electricity bill, and over €500 a year to their gas bill.
This is SSE Airtricity’s fifth price hike since the beginning of 2021, and all of them have been substantial. The last rise alone, which happened four months ago, saw gas prices rise by 39% and electricity prices rise by over 30%.
Daragh Cassidy of Bonkers.ie says: “When all these price increases are taken together, SSE customers will be paying over €1,000 more for their gas and €1,100 more for their electricity each year.”
There is, however, nothing surprising in the latest news. Fuel prices have been going in one direction since the world economy began opening up in the aftermath of pandemic shutdowns. The Russian invasion of Ukraine has of course exacerbated the situation. Last Monday alone, wholesale gas prices rose by 15% following renewed fears about the security of gas supplies from Russia to the European Union. Where wholesale prices go, retail prices are sure to follow, especially if they’re on the way north.
Last year, there were over 35 price hike announcements from Irish energy suppliers, and the trend has continued into this year with Bord Gáis Energy, Energia, Electric Ireland and PrePayPower all announcing massive price hikes.
“To say these are unprecedented times is an understatement,” says Mr Cassidy. “Price increases of this frequency and this magnitude are clearly unsustainable. And more price hikes from other suppliers later in the year, including SSE, are almost a certainty.
“The Government needs to decide now how it plans to help households over the coming months. Is the temporary reduction in VAT being kept? Is another energy credit going to be paid? Is the Government going to place a windfall tax on energy companies — and if so, how would this even work when many are headquartered overseas?”
Mr Cassidy is quick to point out that while you can’t insulate yourself completely from these price hikes, switching supplier to avail of introductory discounts is an easy win for cash-strapped households.
“Despite the rising prices, there is still good competition among energy suppliers in Ireland for new customers right now and many are offering big discounts for a year to those who switch,” he says. “I can’t over-emphasise how quick and easy it is to switch and it can all be done online in the space of a few minutes online on sites like bonkers.ie. You don’t even have to contact your existing supplier to let them know you’re leaving. This is the year you do not want to be overpaying for your energy.”
He also suggests that we should check out the range of Government supports that are out there: the winter fuel allowance, the free electricity allowance and the exceptional needs payment. In addition, some suppliers have set up hardship funds which will provide financial assistance to those most in need.
Protections for customers
In the same vein, the Commission for Regulation of Utilities (CRU) has just announced further protections for customers who are struggling to pay these huge energy bills.
There’s now an extended moratorium on disconnections. ESB Networks will not disconnect someone’s energy supply for non-payment between December 1, 2022, and February 28, 2023. The moratorium for customers registered as being particularly vulnerable is in place from October 1 until March 31.
In addition, debt repayment plans are being extended to allow a minimum of 24 months for customers to repay debt, effective from November 1. Customers can, of course, repay in a shorter period if they wish.
The energy regulator has also reduced the debt burden on Pay-As-You-Go (PAYG) top ups. Suppliers were previously allowed to deduct up to 25% of a customer’s PAYG top up for debt repayment purposes. From October 1, this will be reduced to a maximum of 10%. In other words, an indebted customer topping up by €20 will have €2 deducted and set against their debt, as opposed to €5 under the old rules.
Currently the supplier handbook does not require suppliers to place customers with a financial hardship meter on any discounted tariff. In other words, struggling customers are not necessarily always on the cheapest possible plan. The new measures however will see all customers with a financial hardship meter placed on the cheapest tariff available from their existing supplier from 1st December 2022.
The CRU also said that these measures will be implemented into the technical and operational procedures of both suppliers and network operators over the coming months.
CRU chairperson Aoife MacEvilly said that the regulator is acutely aware of the significant challenges that all customers have been and will be facing in the context of increasing energy costs this winter.
“While the current measures provide a high level of protection for all customers, our focus was to enhance protection and security for the customers in greatest difficulty, including vulnerable customers, customers in debt and customers on financial hardship prepayment meters,” she says. “These requirements will remain in place for all suppliers subject to future CRU reviews, with the first of these reviews to be undertaken in summer 2023.”
As Rob Flynn of Bonkers.ie points out, despite these measures, consumers will not be any more protected against the rising cost of energy, particularly this coming winter.
“Energy bills for domestic energy customers have never been this high, with prices already reaching unprecedented levels. Some customers are overpaying by close to €1,000 — more in some cases.”
“That being said, existing CRU protections of course do not give consumers free rein to not pay their bills. Rather, if a customer is experiencing financial difficulty, the measures ensure energy supply is not cut off, only at the very last resort.”
If you are having trouble paying your energy bills, don’t dodge the issue. The sooner you engage with your supplier, the better. As Mr Flynn points out, a supplier will never want to disconnect a customer and will always work towards helping a customer manage their debt.