After a period of decreases, wholesale gas prices have seen a hike of 30% compared to this time last year. Does this mean that price increases are on the way for households?
Over the last number of years, the Irish energy market has seen many decreases in wholesale prices but now, in euro terms, Irish wholesale gas prices are 30% more expensive on average this month compared with August 2016.
Additionally, the average wholesale price of electricity has also increased by 15% compared with August 2016 and up 4% on last month. The increase in prices can be attributed to the rise on the gas market, while the recovery of wind generation compared with last month has greatly limited that rise.
What does this mean for the market?
When we see the phrase “price hike” in relation to energy prices, we tend to get nervous and rightly so! As we come into autumn and back to school season, closely followed by colder winter weather as well as Christmas, it’s an expensive time for many of us, and the last thing we need to hear about is rising energy prices.
The wholesale price of gas has a big influence on what energy suppliers charge to households, meaning that we could soon see price hikes coming our way.
What does this mean for the customer?
Wholesale gas prices fell by 19.2% in 2016 but suppliers only cut their rates by a fraction of this amount (2.5% to 6% to be exact). If Ireland’s energy suppliers are as reluctant to hike prices as they have been to lower them over the last few months, in a somewhat cruel twist of fate it could actually end up being favourable for the customer.
Basically, what it means is that while customers might not have felt the full benefit from more generous wholesale price cuts in the past; equally (and hopefully) it will mean that they won’t suffer from this recent hike. It will be interesting to see which route suppliers will take.
Not satisfied? Time to #DitchAndSwitch!
Suppliers have tended to pass on savings to customers by offering enticing introductory discounted rates rather than by cutting standard rates.
It remains to be seen how the suppliers will react to this latest hike but a good course of action to take to hedge your bets before any hikes come into effect is to compare suppliers and then #DitchAndSwitch now to sign up to the cheapest discounted rate available. That way, even if suppliers increase their standard rates, you'll still be able to benefit from whatever discounted rate you've chosen; e.g. if you're with a supplier offering a 20% discount and they increase their standard rates by 5%, you'll still be getting 15% off overall.
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Commenting on the report Vayu Senior Energy Analyst, Keith Donnelly, said: “We are anticipating considerable energy price volatility this winter, which could be worrying [...] as this is the time when their energy usage is at its highest."
With that in mind, be winter ready and #DitchAndSwitch using bonkers.ie now.