Electric Ireland will tell politicians ‘no choice’ but to raise prices for customers

Electric Ireland will tell politicians it had “no choice” but to raise customer bills given the “dizzying” rise in gas prices.

Its executive director Pat Fenlon is due to appear before the Oireachtas environment committee next week where he will be questioned by TDs and senators about the price increases.

The meeting was supposed to take place on Tuesday but was postponed due to the budget.

The company – which is a subsidiary of the ESB – announced three price hikes this year, including increases to its standard household electricity and gas prices of 26.7% and 37.5% respectively from October 1.

Electric Ireland is the state’s largest electricity supplier with approximately 1.1 million residential customers.

It has approximately 170,000 residential gas customers.

Budget forecasts, census shocks, retirement policies

Mr. Fenlon’s statement will state that BSE’s production and supply businesses “are required to operate separately, so the increased profits from the BSE production business cannot be used to offset the costs incurred. by Electric Ireland”.

This means that Electric Ireland “must operate in the residential market as a fully autonomous supplier, buying electricity and gas from wholesale markets and in turn selling it to customers”.

On price increases, he will say that “significant increases in customer bills have been driven by extraordinary and sustained increases in the wholesale price of electricity” caused by rising gas prices “made much more acute at the aftermath of the conflict in Ukraine and the reduction of Russian gas supplies”.

Mr. Fenlon will indicate that there has been a 1000% increase in gasoline prices over 18 months.

“Two years ago, Electric Ireland’s annual wholesale energy costs were around €300 million; at current market levels, we expect this cost to rise to around €2 billion. Cost increases of this order of magnitude are staggering,” he added.

His statement will also read: “As we operate as a stand-alone energy supplier in the market, we have no choice but to increase our prices in view of our rising costs.”

Mr Fenlon will say Electric Ireland is “committed to helping our customers in these difficult times”.

It will note “a standard variable tariff for electricity lower than that of almost all competitors over the last 18 months” and a commitment to customers who have difficulty paying their bills.

Vulnerable customers

Mr Fenlon will also say that “disconnections are and always will be a last resort” and he will highlight the regulatory moratorium on disconnections for the winter period for vulnerable customers.

Electric Ireland is also said to have launched a €3 million hardship relief scheme similar to that put in place during Covid, which will provide support to Electric Ireland customers who are struggling to pay their bills.

Earlier this month, ESB Group reported half-year profits in 2022 – including a one-time gain from what it called “exceptional volatility” in global commodity markets – jumped to 390.3 million euros against 128.4 million euros a year ago.

The group recorded a turnover of nearly 3.7 billion euros, against nearly 2.2 billion euros the previous year.

Mr. Fenlon will say that “the most accurate representation of ESB’s underlying financial performance in the first half of 2022 is operating profit before exceptional items”.

He will explain how in the first half of 2022, this amount was 357 million euros compared to 363 million euros in the first half of 2021, a decrease of 6 million euros.

Mr Fenlon will say that the BSE recorded exceptional gains in the first half of 2022 compared to 2021 but they mainly relate to the technical accounting treatment of financial instruments and are non-monetary gains which are not linked to the price paid for electricity by customers.

He will also say: “ESB must make an appropriate level of profit, so that it can repay its debt, reinvest in critical networks, renewable energy production and other important energy infrastructure, as well as pay taxes and dividends to the government.