SEM Chart of the Week
Ring of Fire: Cost of Energy falling
Bord Gáis released its monthly Energy Index Report for December on 14 January. The Index explores market developments and price movements in oil, gas, coal and electricity.
The Energy Index reports that wholesale electricity prices fell 13% to €45.44/MWh in December from €51.96 in November, due to falling gas prices and higher wind output. Day-ahead natural gas prices also fell 13%, to 32.3 p/therm, as a combination of lower than expected demand in Ireland, and healthy storage levels and robust LNG flows in GB meant the system was able to balance comfortably throughout the month.
Despite reductions in wholesale prices, which make up a substantial proportion of retail bills, energy suppliers have reported no immediate plans to cut household charges. The four big electricity and natural gas suppliers to Irish households – Bord Gáis Energy, Electric Ireland, SSE Airtricity and Energia – have said they would review charges but stopped short of pledging to cut them.
I went down, down, down
Bord Gáis reported that its Energy Index closed at 96 in December, down 2% from the previous month. The company maintained that it was committed to ensuring that customers got their energy at the best possible cost. Electric Ireland, which supplies electricity to 1.1m homes, said that it “keeps its domestic tariffs competitive and under review”. SSE Airtricity and Energia both noted they review prices regularly and endeavour to pass on savings to customers.
The latest CRU retail markets report published in November 2019 outlined price increases for 6 suppliers between Q3 2018 and Q3 2019. The bedding in of the new SEM and Wholesale price volatility may apportion some of the blame for this, however, the chart above profiles the overall cost of energy and the cost of energy has fallen by 9 points over the last 12 months.
And the flames went higher
Although energy suppliers have stated that they will continue to closely monitor the wholesale market, it is currently unknown whether this will be reflected in customer costs. Other factors contribute to the cost suppliers charge consumers, but as other costs haven’t noticeably increased recently, there is the potential for suppliers to drop consumers tariffs in the near future.