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Electricity prices are falling - but when will you see the savings?

Cost of wholesale electricity has fallen by over 70%, but how much will you see off your bill?

According to figures from the Central Statistics Office (CSO) published earlier this week, the cost of wholesale electricity is now over 70 per cent cheaper than it was two years ago. Photograph: Bryan O Brien/The Irish Times
According to figures from the Central Statistics Office (CSO) published earlier this week, the cost of wholesale electricity is now over 70 per cent cheaper than it was two years ago. Photograph: Bryan O Brien/The Irish Times
Conor Pope's picture
Conor Pope
Tue Apr 23 2024 - 12:51

There is some great news on the electricity front, I hear?

Great news might be a stretch but certainly things are looking up when it comes to the cost of domestic energy. According to figures from the Central Statistics Office (CSO) published earlier this week, the cost of wholesale electricity is now over 70 per cent cheaper than it was two years ago.

Over 70 per cent? That is massive. Why have the prices fallen so much?

It is mainly down to the cost of oil and gas on international markets. Back in the winter of 2021, energy prices globally started to climb significantly as a result of increased demand in the post-pandemic period. Then in March of 2022, prices went through the roof following the Russian invasion of Ukraine.

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But that conflict is still going on, right?

Of course it is, but while the war in the east still rages, the markets that were once so spooked by the conflict now have it factored into their pricing models. That, coupled with new the sourcing of supplies of energy to make up for the restriction in supply from Russia as a result of sanctions on that country, has seen prices on wholesale markets falling steadily for well over a year.

Does that mean my electricity bill is down 70 per cent too?

Sadly, it does not. The good news is the cost of domestic electricity is down a fair bit and is likely to fall more as the year progresses.

How much is a fair bit?

It depends on your supplier and the nature of the deal you are on but the annual cost of heating and lighting a typical home has fallen from around €4,000 to around €3,000.

Hang on. That’s a fall of just 25 per cent? That is a long way off 70 per cent?

It is indeed but there are a couple of complicating factors. It is worth noting that while wholesale prices soared in the spring of 2022, at least some of that spike was absorbed by the domestic energy companies in Ireland. They did not – in other words – pass on all the price increases so they are not likely to pass on all the price decreases. It is also true to say that wholesale prices are still around double what they were before the energy crisis kicked in so it is not likely we will return to very cheap energy prices any time soon.

But they are going to pass on some more cuts, right?

They are. According to Daragh Cassidy of switching website bonkers.ie, it is “highly likely we’ll see another round of price cuts in the second half of the year of between 10 to 20 per cent.” If we are wearing our optimistic hat, a further 20 per cent decline in prices could see the annual cost of household energy falling back to around €2,4000 which is a long way off the highs of €4,000 recorded in 2022.

And I just have to wait for the companies to pass on the cuts, do I?

You can do that for sure but there are ways you can save sooner rather than later. We have said it before and we will say it again, there is a real benefit to shopping around when it comes to energy.

How much benefit are we talking about?

Well, if you are on a standard rate of electricity you are paying around 37 or 38 cent per kWh including VAT at present, according to Cassidy. He points out that there are rates on the table for switchers that are as low as 25 or 26 cent. That equates to a saving of over €500 for the average electricity customer. “It’s a huge difference,” he says. “And it’s similar for gas.”

So what do I need to do to make the switch?

Well, your first port of call should be your existing provider. Call them and say you are going to move to a different provider unless they offer you a discount comparable to what they might offer you if you were a new customer. If they offer you nothing for your loyalty, it is time to move.

Where do I go?

You could check out switcher.ie or bonkers.ie. Both price comparison and switching websites are regulated and will give you sense of what is on offer. Switching using either of the websites is also an option and can save you having to make calls to individual providers. You simply fill in some forms on the website and they do the rest.

Do I run the risk of being disconnected when making the switch?

No. Many people think that they might suffer an interruption of supply when moving from one company to another but – unlike say the broadband of telecoms market – that simply cannot happen when changing energy provider.

What information will I need if I switch?

Note the MPRN (meter point registration number) on your electricity bill or your GPRN (gas point registration number) on your gas bill and your billing details. Take a meter reading. This is the measure your new supplier will start billing you from. Your old supplier will use it to close your account. Call the company you are currently with and tell them you’re leaving and then call your new company and tell them you want to sign up.

Is there anything else I should watch out for?

You should ensure you’re not still in contract, otherwise you could be charged an early exit fee. You should also ensure any arrears on your account have been cleared as this could hinder the switch.