Q&A: Energy price hikes - Is there anything I can do to lessen impact of increases?

Don’t tell me there’s been another energy price hike?

There has, this time from Flogas. It announced that its electricity customers will face a 17 per cent price increase from October 26th while its gas customers will have to contend with a 23 per cent hike from the same date.

What does that mean in real money?

Well, it depends on your usage and the size of your house but looking at averages, the increases will see an average customer’s electricity bill climb by around €350 while gas bills are set to rise by around €400 over the course of a year.

That’s not so bad, is it?

It is only a very small part of the picture. Flogas has already imposed six price hikes on its 25,000 or so customers since the start of 2021 and their bills will have more than doubled over the last 18 months or so.

And what is behind the increases?

Flogas has blamed “continuing and unprecedented increases in wholesale gas prices and the associated increases in wholesale electricity costs”. This time last year, the blame was being put on a global recovery and a spike in demand for energy in a post-Covid world. That was bad enough, but in late February, Vladimir Putin ordered the invasion of Ukraine which produced spiralling prices. Then, the Kremlin started weaponising the gas it supplies to the EU, which made the energy crisis even worse. Gas is now trading at more than 12 times its 2021 rate.

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Was it a surprise?

It was the opposite of a surprise and comes after Electric Ireland, Bord Gáis Energy, Energia, SSE Airtricy and Pre-pay Power rolled out similar increases in recent weeks.

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Is there anything I can do to lessen the impact of the price increases?

Well if you are one of the more than half a million customers of Irish energy companies who have not switched provider in recent years do it immediately.

What is the point of switching if all the companies are hiking prices?

Because all the companies are offering discounts to new customers. The discounts are not as generous as they might have been in times past but even if you can save 20 per cent on the standard unit rate then it is worth switching. If you move from company A which is charging you €2,500 a year for gas, for example, and get a big discount, then you could save as much as €1,000 without any interruption of supply.

But I have already switched this year?

The good news — if that is not too strong a word — is that you will get a discount on the standard rate based on your agreement, but the bad news is that you too will see prices climb dramatically even though you have made the switch.

What if I can’t pay?

Well, the good — if that is not too strong a word — news is that no household will be disconnected for not paying their energy bills during the winter months that run between December 1st and the end of February, according to the Commission for the Regulation of Utilities. It has also put in place arrangements including extended debt repayment periods for customers in debt; and lower debt repayment on top-ups for customers with financial hardship prepayment meters.

But prepay meters are bad value for money, right?

They can be for sure but the CRU has said customers on financial hardship meters will be offered the most favourable tariff available from their supplier.

Are energy companies making big money as a result of the crisis?

They are certainly making a lot of money. In August Bord Gáis Energy’s British owner, Centrica, said its Irish subsidiaries’ operating profits grew 74 per cent in the first half of this year to £33 million (€39.4 million) from £19 million over the same period in 2021. The ESB Group has also reported surging profits with revenues increasing by €1.5bn in the past year.

What help can I expect from next week’s Budget?

Energy credits are likely to play a starting role in the Budget. They could amount to €600 over the course of the next six months or so. The Government is also expected to introduce broad-based measures to help businesses with their energy bills.