When will falling wholesale prices reduce my bill? - Midlands 103
The cost of wholesale electricity has been falling consistently over the last few months. In response, many people are asking when this will translate into lower energy bills for consumers.
Daragh Cassidy appeared on Midlands 103 to discuss the state of the Irish energy market, and what it could mean for households.
Listen to the interview above or look at the main points discussed below.
Main points from the interview:
- Despite falling wholesale prices, households have not been seeing lower energy bills. This lag is down to hedging by energy providers.
- However, Daragh estimates that we may see a 10% to 20% decrease in bills come the end of the year. This would still leave bills much higher than was usual before the Ukraine war. To reach those prices, there would need to be a decrease of around 60%.
- There is still lots of volatility in the European gas market, due to widespread restructuring as the continent shifts away from Russian gas.
- There is no clarity on how suppliers hedged, so it is hard to know how well they protected Irish consumers.
- You can find out why electricity prices are so high here.
- Listeners asked about 100% renewable household energy contracts, hoping that these wouldn’t be as exposed to European gas volatility.
- However, Daragh informed consumers that these green energy adverts were likely to end soon, as they are misleading.
- Even if an energy supplier produces only using renewables, this then gets passed into the grid as a whole, which consists of electricity produced using coal, oil and gas. Therefore, when a household uses electricity, it is going to be from these mixed sources.
- The prices that have been locked in for electricity at the offshore wind auctions are also higher than would have been expected pre-Covid, meaning that renewables will not necessarily lead to lower electricity prices.
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