Are maximum price orders a good idea? - Newstalk

Image audioImage Are maximum price orders a good idea? - Newstalk

In recent months the topic of rising gas and electricity prices hasn’t ever been far from the headlines. Most energy suppliers have increased their prices multiple times since the start of 2021, causing concerns for consumers as we enter into the winter months.

Maximum price orders will now be considered by Government to halt rising gas and electricity costs, however energy companies are going out of business because of price caps in the UK. This begs the question - should we put a cap on energy prices here to counteract the rising costs? 

Head of Communications at, Daragh Cassidy, appeared on Newstalk to discuss the implications of maximum price orders and alternative measures to offset energy price increases. People Before Profit TD Paul Murphy also joined the interview.

Is there a justification for capping energy prices for consumers?

Paul: People are faced with huge energy price rises this winter. Already prices have gone up by 25% in some cases. That’s going to amount to a total average increase of €400-500 for a lot of people over the winter months. 

1 in 10 people in Ireland already lives with fuel poverty and older people often cannot afford to heat their homes. The extra cost is unaffordable. As an immediate first step, maximum price orders should be considered per unit.

Daragh: Implementing a maximum price order is certainly a way to help cope with rising energy prices, but it may not be the right way and could have negative consequences. 

Companies are going out of business in the UK because of this, which we don’t want to see here as people will lose their jobs and there would be chaos in the energy market. 

There’s an easier solution rather than capping prices and that’s looking at the amount the Government takes. On a yearly basis, the Government takes around €80 in carbon tax, around €60 for the PSO levy and around €300-400 in VAT. 

The Government could easily reduce VAT, which is what the Spanish government has done and they could also reduce the carbon tax and PSO levy. There are other measures we could look at first that wouldn’t put suppliers and jobs at risk. 

Data centres

10% of total electricity produced in this country currently goes to data centres and this is going to rise to 30% by the end of the decade. 

Undeniably data centres are placing a huge strain on the electricity network and there is a trade-off. It does seem unsustainable at the moment.

However there are also jobs and investment involved too. The data centres are needed to support the multinational tech companies here.

The immediate problem at the moment however is not because of data centres. There are wider issues due to Covid-19, there are bottlenecks and also two major gas-fired power plants in Ireland are out of action at the moment.

For a more in-depth look at why energy prices are increasing at the moment, take a look at this blog.

Possible solutions

While on average most households will see winter energy bills increase by around €400, one or two suppliers have announced increases that will amount to almost €700-800 for the winter period. 

By reducing VAT the Government could easily save people a few hundred euros on their energy bills and perhaps a tax credit could even be brought in in the 2022 Budget to help people.

Energy bills at the best of times can be a bit of a struggle, so a lot of people will face difficulties.

Switch and save

Are you concerned about the impending winter energy price increases? On, you can easily switch to a cheaper energy supplier which will help offset price hikes. 

It’s quick and easy to switch and can all be done on in the space of a few minutes. Use our energy comparison tool to compare the best deals today across all 14 energy suppliers nationwide.

For more information before you make the switch, consider taking a look at some of our helpful energy articles:

You can stay up to date with all of the latest energy news and top saving tips with our blogs and guides.

Get in touch 

Do you have any questions about why energy prices are increasing or about a potential maximum price order? 

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