Wholesale electricity costs fall to lowest point in two years

SoapMcTavish

When will see this passed on ??? Disgraceful.

https://www.thejournal.ie/wholesale-electricity-prices-down-6148572-Aug2023/

fergiesfolly

Listening to a piece on Newstalk this morning...Our electricity prices are on average €900 higher than the rest of Europe per year. Another way for Paddy to get screwed. And damn all our government will do about it.

Victor

People got hundreds of euros off their bills last winter and are likely to get the same this year.

Shauna677

But why should government be left to foot the bill when the energy companies are making so much profit.

Victor

The government foots the bill for nothing. A windfall tax is being applied to energy suppliers.

irishgeo

https://www.boards.ie/discussion/comment/121014844#Comment_121014844

We are totally reliant on gas our main generation source. Gas is pricey and we are the only country in Europe without gas storage facilities. The leaves wide to gas price swings. Also the rest of Europe has access to nuclear.

Calahonda52

for better or for worse the elec companies entered into fixed priced contacts which are now higher than the daily wholesale price on offer via the SMO, so they are still paying a higher price than the daily wholesale on this contracts, so they are not making super profits yet.

Ryanair does the same with jet fuel.

In Texas and some other states in the US, there are two markets, regulated like we have, or pay using a market price, can be hourly or day ahead or similar.

A few weeks ago the hourly rate went to 2.5 USD a kWh, up by 8 times what the Saturday rate was

Wolf359f

https://www.boards.ie/discussion/comment/121014967#Comment_121014967

The fixed price contract has been explained and I don't have an issue with that. However the rest of Europe also do the same. So the question is why has consumer energy prices reduced in the rest of Europe and not in Ireland? Is Ireland using longer term contracts so they are locked in longer?

They they operate on a margin, so them buying at a higher price means more profit for them? (10% of 30c is more then 10% of 20c etc...)

Or did they lock in at a higher rate than the rest of Europe?

It would be nice if they were open and transparent, seeing as how they will be charging the same rate as last year and more than likely the government will have to provide energy credits again.

SoapMcTavish

We need some transparency here - Why are prices not coming down ? Explain the hedging issue - and give us timelines !!

ongarite

https://www.boards.ie/discussion/comment/121016278#Comment_121016278

Energy costs in EU are irrelevant to Ireland. We are not connected to EU energy or gas market. Until the French interconnector is completed we are effectively an energy island.

We import gas from the UK and the price we pay will be what UK pays plus margin, transport costs. UK wholesale gas prices are still significantly higher than EU average.

The UK energy cost cap is set to be reduced but not to levels pre 2021.

Wolf359f

https://www.boards.ie/discussion/comment/121016303#Comment_121016303

UK wholesale price p/mwh: 38.58c

EU wholesale price p/mwh: 38.80c

Where are you seeing the UK wholesale price as being significantly higher than the EU average?

What's the point of Ireland being in the EU energy market when the price rises on the mainland and our price increases.... But when prices fall on the mainland ours don't?

Not all of our gas comes from the UK and not all of our electricity comes from gas. Likewise, most other countries in Europe import their gas from a neighbour or have to pay transit costs.

French interconnector will not reduce our electricity prices as we are already in the EU energy market.

TokTik

https://www.boards.ie/discussion/comment/121014967#Comment_121014967

Crazy how hedging only seems to work one way. When wholesale prices started steadily rising last year, so did consumer prices. Now wholesale is on the way down, consumer prices stay at the high level because of “hedging”.

newhouse87

Its essentially because the energy companies here hedged very badly. They are still paying the high hedged contract and until they are wound up and new contract begins we will be paying higher. Bad hedging means consumer pays for the electric companies error.

Wolf359f

https://www.boards.ie/discussion/comment/121016616#Comment_121016616

That seems to be the only reason that I can see. Probably hedged for longer than the rest of the EU, which is why we don't see a reduction (despite commerical customers seeing a reduction).

Knowing the Irish way, the contract will expire just as wholesale gas prices rise high again and again be locked in at the higher rate.

Better profits if you're adding a margin to higher prices!

_Kaiser_

Personally, while both are still extremely high, I still have a lot of credit built up from the grants last year on the electric account (compounded by the annual level pay recalculation at the end of the year not drawing from this first). It's the gas that is the big one over the winter/early spring months for me (not helped by the house I live in being crap from an insulation/general build quality standpoint).

If they go with a similar grant this year, they should cover both - and probably something for solid fuels as well - rather than just electricity.

Ger Roe

The government 'covering some of our costs' by handing our own money back to us, while the retail prices continue to rise, or at least, not fall - is not sustainable. The electricity and gas market concept is flawed and biased towards the supplier. Is this the price we pay for attracting inward investment in the sector, is a gullible and complaint public base a market factor that is used to encourage new entrants in ... entrants that never actually create any serious competition and con us with complicated smoke and mirrors price policies and supply plans?

The government needs to reform the market conditions in favour of the consumer - like we used to do when we had a national electric generation and supply company. We actually were world leaders at the game at one stage, before we handed it all over to rip off commercial forces, that we can't seem to influence in any meaningful way.

The energy regulator needs a radical re-focus too - forget trying to encourage new competition into the market and work to make the existing suppliers actually compete to give the consumer a fair deal.

May be we need to go back to the approach that build the country in the 1930's.... stand alone and re-introduce a national agency to truly serve power to the people.

_Kaiser_

https://www.boards.ie/discussion/comment/121045784#Comment_121045784

You're not wrong, but it won't happen. It's not the (particularly) FG model of privatise everything, or the "Green" model of tax/ban everything.

Unfortunately all we can hope for is a few quid of our own money back from this shower. Worse again, there's no viable alternatives either.

irishgeo

https://www.boards.ie/discussion/comment/121045784#Comment_121045784

It won't happen because it's a EU open market now and I doubt they would allow us back to just one company. Any reform will have to happen at EU level.

The biggest issue is that the price of electricity is set by the highest priced product needed to generate it. So the price of gas which is needed to top up wind solar production to meet demand etc.

The ones making huge amounts of money are the wind providers because it costs way less to produce than the price of gas which means huge profits.

Ger Roe

https://www.boards.ie/discussion/comment/121054495#Comment_121054495

That's the whole issue alright.... the EU won't allow it. There is a far more complicated political debate to be had there about how our locally elected politicians won't stand up for us more in Europe and hide behind 'we can't because Brussels says so'.

Unfortunately a lot of the EU policies on commercial market forces and competition (banking, insurance, telecomms), don't work here where we have an isolated and very small market. We do not get the full benefits of being in the European market, by virtue of our geographical location and so we need some leeway, one size does not fit all...when you are a relatively sparsely populated rock physically separated from the continent, with most of your trade routes now operating through a non UK territory.

We need some understanding of those facts and some new approaches, to make sure we get some benefits .... also, we need energy/insurance/telecomms regulators with balls.