Wholesale electricity prices are 42.5% lower than April 2022 - Today FM
Daragh Cassidy, Head of Communications at bonkers.ie appeared on Today FM to discuss wholesale energy prices and whether this fall in prices will positively affect consumers' electricity bills.
Listen back to the interview above or take a look at the main points below.
Main points from the interview
- According to the latest figures from the Central Statistics Office, wholesale electricity prices fell by 13.5% last month and are now 42.5% lower when compared with April 2022.
- However, this fall in prices won’t positively impact consumers' bills until the second half of the year according to Daragh, and even with that prices may only fall by 10 to 20%.
- In 2020, Ireland had the third highest electricity prices in Europe. Our electricity bills would need to fall by 50 to 60% to hit the pre-energy crisis levels that we were experiencing in 2020.
- There are two reasons why the fall in wholesale prices isn’t translating over to our bills. This is because electricity prices are still at really high levels and the other is due to hedging.
- Even after a reduction in wholesale prices, they are still three times more expensive than they should be.
- Hedging is when energy suppliers buy gas and electricity on the wholesale markets at various times throughout the year, sometimes up to 12 or 24 months in advance.
- Suppliers purchase electricity at various times and therefore, at different prices to ensure the security of supply and to try to avoid wild swings in costs for households.
- So even with wholesale prices dropping, our electricity bills may not fall because the electricity was bought on the wholesale market when it was more expensive.
- If you compare the cost of the wholesale market in Ireland to other European countries, Ireland is a lot more expensive. Currently, the average cost of electricity in Ireland per kilowatt hour is between 40 to 50 cents while in Europe it is around 20 cents. So the real question is, why does it cost so much money to generate electricity in Ireland?
- A reason for this may be because we do not have access to nuclear energy, but questions also need to be asked of the government and the Commission for Regulation of Utilities (CRU) claims Daragh.
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