Bord Gais today received permission to increase household gas prices by 8.5% - an even higher price hike than the company initially asked for. This increase, which will take effect on October 1st, will mean that gas bills could go up by as much as €71 per year or around €12 per bill.
Bord Gais is the only regulated gas supplier and needs to seek approval from the Commission for Energy Regulation before it can increase gas prices. During the summer, Bord Gais applied to increase prices by 7.54% for domestic households. The company cited a weak Euro as the primary reason it needed to charge customers more.
Most gas used in Ireland is purchased from the UK. The regulator has acknowledged that the falling value of the Euro against Sterling has increased wholesale gas prices, and that these extra costs can now be passed on to households. Noting that the Euro has fallen even further in value since Bord Gais asked for an increase of 7.54%, the regulator has decided to give them an even higher increase of 8.5%.
Depending on how the price increase is applied, Bord Gais customers can expect pay between €64 and €71 more per year for their gas. Currently an average household supplied by Bord Gais pays €890 per year for gas. Customers can expect this to increase to as much as €961.
In September 2011, Bord Gais customers were paying €727 per year for their household gas. This price hike will mean that in just 12 months, gas prices will have gone up by €234, an increase of 32%.
In October 2011, Bord Gais also increased prices by 22%. The company initially lobbied for an increase of 28% but this was thought to be excessive by the regulator at the time.
It is expected that all other gas suppliers including Airtricity, Electric Ireland and Flogas will follow suit with similar increases. It is what they did in 2011.
As natural gas is the predominant fuel used to generate electricity in Ireland, gas prices increases are usually followed by increases in the price of electricity. There are no longer any regulated electricity suppliers in Ireland so electricity price increases will vary from supplier to supplier but customers can expect to see prices go up by around 5% in the coming months.
The next gas price review is scheduled of January 1st. In the past Bord Gais has applied for and received price cuts as they did in 2010.
Around 450,000 households are currently supplied by Bord Gais, although numbers have been falling as customers switch for cheaper prices. Bord Gais is currently the most expensive gas supplier and is regulated so the company is unable to react quickly to price changes from other companies. Flogas, Airtricity and Electric Ireland discount from the Bord Gais regulated prices. In order for Bord Gais to be deregulated, the company must lose at least 40% of their customers.
What do you think about these increases? Are they justified - will they make you switch? Let us know in the comments!