Energy prices on the rise - Morning Ireland
As we approach the end of August, evenings have started drawing in earlier. With most energy suppliers having increased their prices this year, consumers will start to feel the impact on their household bills in the months to come.
Head of Communications at bonkers.ie, Daragh Cassidy, appeared on Morning Ireland to discuss the reasons behind the rising cost of energy, changes to the PSO levy and the value to be had by switching suppliers.
Here’s a breakdown of what was discussed by Daragh in the interview.
Why have energy prices increased so much?
There are three main reasons why prices are increasing so much:
- Despite all the talk we hear around renewable energy, around 60-65% of our electricity is still generated from burning fossil fuels, such as coal, oil and gas. The price of coal and gas in particular has increased hugely on wholesale markets in recent months as the global economy reopens and recovers from the pandemic and demand for energy increases. Covid has also created supply chain bottlenecks putting further upward pressure on prices and the energy market hasn’t escaped this.
- Several power plants have been out of action recently. These go down regularly for maintenance and cleaning. However in recent months, a higher number than usual have been out of action and for longer than usual too, partly due to covid. This includes two of the country’s biggest gas-powered plants, Whitegate in Cork and Huntstown in Dublin. This reduces the electricity to the grid and coupled with demand, puts pressure on prices.
- The level of wind output in recent weeks has been below normal levels. According to the World Climate Service, June and July of this year was the least windy period on record, or since 1960 in parts of Ireland and the UK. In situations like these, we usually rely on backup fossil fuel-powered plants, but numerous have been out of action.
How will the increases impact the average household bill?
The price hikes vary by supplier. Practically all have increased prices once. Some have increased prices twice and others, such as Flogas and Pinergy, have increased them three times so far this year.
When you look at all the price increases, they would add around €300 to an average household energy bill.
The PSO levy decrease
The Public Service Obligation levy (PSO levy) is used to support the development of renewable energy in Ireland. The PSO levy went up last year but is set to come down this year by around €30. Last year the PSO levy was around €88 including VAT, so it’s going down to around €58 this year.
The decrease is welcome but unfortunately it’s nowhere near enough to offset the price hikes that we’re seeing.
Is it worth switching energy suppliers if prices are increasing?
Despite price increases, there is still an incentive to switch energy supplier.
There’s a lot of competition among the 14 energy suppliers in Ireland right now. They’re all offering huge discounts for the first year to those who switch.
For example, the average switcher could save around €500 a year by changing supplier, which would more than offset the price increases.
It’s quick and easy to switch and can be done online in the space of a few minutes using our energy comparison tool.
Before making the switch, you might find it beneficial to check out the following energy guides:
- Learn about what you need to switch energy suppliers in this guide.
- Become familiar with the most frequently asked questions about the energy switching process.
- Have a read of our guide on 7 things to consider when switching energy supplier to know what to look out for when switching.
If you’re still in contract, you could be subject to an early exit fee. If you don’t feel like paying this cancellation charge, you could try to reduce how much energy you use around the home instead. Check out these 15 ways to use less electricity and save money for some helpful tips.