Wholesale electricity prices on international markets fell sharply in July, placing pressure on providers here to reduce prices for domestic users.
According to the Central Statistics Office (CSO), wholesale electricity prices fell by 17.9 per cent in July and were 64 per cent lower on an annual basis.
This comes after a previous monthly increase of 11.3 per cent in June, a figure that bucked the general trend of falling prices.
“Electricity costs on the wholesale market are now lower than any time during the past two years. The last time that prices were lower than the current rate was in June 2021,” the CSO said.
Providers here were forced to raise bill prices for users multiple times last year as prices on wholesale markets soared in response to Russia’s invasion of Ukraine.
However, the recent decline has not been passed on to consumers here largely because of hedging, where suppliers buy futures contracts to insulate themselves against price volatility.
Ireland’s energy watchdog Commission for the Regulation of Utilities said recently that while prices remained high it anticipated that a fall from the highs recorded in 2022 would be passed on to Irish consumers before the end of the year.
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Responding to the latest figures, Bonkers.ie spokesman Daragh Cassidy said after the previous month’s rise, wholesale electricity prices resumed their slow downward trend in July.
“However at €96 per MWh [megawatt hour], prices are still over double the level they were in 2020 before Covid and then the war in Ukraine wreaked havoc with energy prices,” he said.
The average price over the past six months is still over three times what would be considered normal, he said.
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“This is why households haven’t seen a reduction in their electricity bills yet. There hasn’t been anything to pass on really,” he said.
“Yes, wholesale prices have fallen in recent months and some of the percentage drops look huge – but prices have fallen from really high levels to begin with. And a lot of that increase wasn’t passed on to households in the first place,” he said.
“A lot of media attention has focused on the hedging strategies of suppliers as the reason for our high prices. But the simple fact is that the cost of electricity in Ireland is still very expensive to generate and has been for many years,” Mr Cassidy said.
“Even if suppliers had no hedging at all in place, at a wholesale price of close to €100 per MWh, which it was in July, the best price suppliers could offer consumers is probably between 35 to 38 cent per kWh including VAT,” he said.
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“Looking forward, we should see some small reductions from suppliers over the coming weeks as hedging strategies unwind. But our electricity prices will remain very high for the foreseeable future, unfortunately. And we may never get back to the more normal levels they were at in 2020,” he said.
The CSO figures for domestic producer prices for manufactured goods were on average 0.2 per cent higher in July compared with a year earlier, while producer prices for exported goods fell by 5.4 per cent. Overall, manufacturing producer prices were 5.2 per cent lower in the year.
Producer prices for food products fell by 8.1 per cent in the 12 months to July, while the food products, beverages and tobacco index was down by 7.1 per cent.
Some of the most notable changes in producer prices for food products over the 12 months to July 2023 were: fruit and vegetables (+14.9 per cent), dairy products (-17.4 per cent), other food products (-10.7 per cent) and vegetable and animal oils and fats (-8.9 per cent).
