Are energy suppliers preparing for more price hikes in 2022? - C103
Since last year we’ve all become quite accustomed to energy price increases.
The energy supplier is set to increase its gas prices by 43% and electricity by 29% come April 15th.
Listen back to the interview above or take a look at the main points discussed by Head of Communications at bonkers.ie, Daragh Cassidy, in the interview below to find out:
- How much national energy prices are increasing by
- What you can expect from suppliers
- How to save money
Is 2022 the new 2021 for price hikes?
The timing of this announcement is of no surprise given skyrocketing wholesale energy prices, but the increase certainly is.
In 2021 there were 35 price increases in the energy supply market and it looks like 2022 is set to follow suit.
We have never seen anything like this, but we are sure to see a big dent in peoples’ pockets.
Bord Gáis did pledge and honour a commitment to stop any 2021 winter price hikes, but could this new year announcement be the supplier's way of playing catch-up?
Interestingly, after this huge price increase, Bord Gáis is not even the most expensive energy supplier!
BGE raised its electricity prices 3 times in 2021 and gas prices 2 times, while other suppliers raised their prices 5 times.
Not only are energy prices increasing but standing charges are too
A standing charge is a set daily rate that suppliers charge to provide you with electricity and gas network services. The standing charge is applied for each day of the billing period, which usually lasts two months.
The standing charge for gas has now increased by 43% and electricity has increased by 29%.
This means that even if you turn off every light, appliance, and item that uses electricity at home, you’ll still be faced with increased costs.
Since price hikes first started in Autumn 2020 the overall increase of standing charges has been €123 for electricity and €80 for gas.
With no sign of these price hikes from energy suppliers slowing down, life has certainly become more financially difficult for energy users.
Why are energy prices increasing so much?
Contrary to popular belief, price hikes from Bord Gáis and other energy suppliers are probably not due to the political events in Ukraine.
The prices are most likely due to increasing wholesale prices.
Here’s how it works:
- 40% - 50% of Irish electricity is powered by gas
- So when gas prices increase, heating and electricity prices also increase
In 2020, gas was trading at 40 - 45 pence per therm (a therm is a unit of measurement for gas) in UK markets. This is the best proxy for Irish prices.
However, over the next 18 months, drastic price hikes would come:
- In 2021 prices increased to 200 pence per therm
- In December 2021 prices increased to 400 pence per therm
- At one point the prices were set at 600 pence per therm
That is a huge hike in just 18 months that is incredibly difficult for energy users.
Our source of energy could not even be shared between gas and renewable energy as 2021 was recorded by Met Eireann as being one of the least windy years since 1959.
Can we expect other energy suppliers to follow Bord Gáis?
Bord Gáis is a giant in the energy supply market with substantial influence.
By increasing its prices, it has essentially signalled to all other suppliers that now is the time to increase their energy prices too.
Energy users can now expect to see price hikes from their supplier over the next few days or weeks.
All energy suppliers face the same price pressures and source their energy from the same market.
This means that even without the influence of BGE, price hikes across the board would only be a matter of time.
Can I terminate my contract if they increase my price?
An important point about price hikes is that in Ireland we don't have fixed energy contracts.
Suppliers are free to increase or decrease their prices as they like.
Now, when you sign up to an electricity or gas plan, that contract is made with sign-up discounts applied.
During your contract, suppliers can then increase (or decrease) their prices with your discount still applied. For example:
- You sign up to a gas plan worth €100 with a €10 discount that brings the price to €90
- The supplier then increases its prices from €100 to €110
- Your €10 discount is still active meaning you now pay €90 €100 instead of €110
This means that although you start paying more, your discounts are still applied and the supplier has not broken its side of the contract.
Want to terminate your contract?
For most suppliers you can pay an early exit fee of €50 to end your gas contract or €100 for dual fuel.
We would advise that you check the terms and conditions of your contract for confirmation.
Is now the time to change your energy supplier?
Gas and electricity might be going up in price but you can still save money.
Suppliers are offering discounts worth 30% to 40% to new customers switching right now.
40% of people in Ireland have never switched energy supplier according to the CRU.
So if you haven’t switched in a few years then you are your current supplier's top rate customer - no discounts, and on its standard rate - that is not what you want.
Use bonkers.ie and you’ll see what suppliers are prepared to offer you right now to switch over to them.
What is price walking?
Price walking is when you’ve been with the same supplier for a few years and they increase your price compared to the discounted rate they charge new customers.
However, what they haven’t banned is new customer discounts.
So we advise that you use the bonkers.ie price comparison service to find the best deal on your energy today to start saving money.
Switch and save on bonkers.ie
With prices on the rise, now more than ever is the time to switch.
See a deal you like? Switch for free and save hundreds of Euros instantly!