Households face paying €400 more this winter as energy crisis intensifies

The crisis deepened yesterday when Energia announced its third rise for its 200,000 residential customers.

Rapidly rising costs have prompted calls on the Government to cut the taxes on electricity, gas and home-heating oil.

But the Government has no plans for new measures to ease the burden on families from rising energy prices, despite energy tax cuts and new subsidies being introduced in other European countries.

Global gas prices are rising to record levels, due to higher demand caused by economic recovery following the pandemic.

Some 60pc of the energy used in this country still comes from fossil fuels. So far this year, there have been 25 different electricity and gas-price rises announced from the 14 different providers.

The impact will only become truly apparent this winter as the need for heating and lighting our homes increases. Those working from home will see sharp increases in their bills and the elderly are particularly vulnerable.

Energia yesterday announced that electricity prices are to go up by almost 16pc next month, with a rise of 18.5pc in gas also stated. Its three electricity price rises this year will add €450 to the average bill.

Energia blamed surging costs on global energy markets.

A number of energy providers in this market have announced four price rises this year, with the larger players now expected to announce more increases.

This means some families face a hike of as much as €500 in annual energy bills.

Daragh Cassidy of price comparison site Bonkers.ie said the various price-rise announcements would mean an average increase of €400 in energy bills this winter for households.

He said there is a crisis in the energy market at present as rapidly increasing prices in the wholesale cost of energy are being passed on to consumers. This is coupled with a lack of electricity output due to power plants being down.

“Price increases of this magnitude and frequency are unsustainable. Coupled with recent concerns about potential power outages and pressure demands on the grid, questions need to be asked about how the market is being managed,” said Mr Cassidy.

The energy prices are separate to the carbon taxes on gas, home-heating oil, coal and briquettes, which are set to rise from May.

Now there is a call for a cut in the VAT on energy bills. There are predictions of more rises to come as wholesale gas prices surge across Europe.

The energy shock has prompted some European governments to introduce subsidies for families and to cut taxes on energy consumption.

In Spain, electricity taxes are being cut temporarily, and windfall gains for energy firms are to be redirected to consumers.

Italy has injected €1.2bn into the energy system to reduce bills. In Greece, the government is planning to offer energy subsidies to the majority of households.

And the French government is considering extending energy grants for households.

But Environment Minister Eamon Ryan’s department did not outline any plans, when asked if any similar measures were being considered in this country.

Chairman of the Consumers Association, Michael Kilcoyne, said there is an urgent need for a cut in the VAT rate on electricity, gas and home-heating bills, which is 13.5pc.

“They could do it for the hospitality industry, so they should it for consumers,” he said.

Mr Kilcoyne stated that one of the main reasons electricity bills were high was because of the VAT charged on them, carbon tax and the level of standing charges.

“There are people who won’t be able to afford to heat their homes this winter, particularly elderly people on fixed incomes,” Mr Kilcoyne said.

Cost pressures on energy suppliers are being passed on to consumers.

This is due to a massive increase in demand as firms ramp up production following the easing of restrictions.

Other key factors are a fall in delivery by gas tankers due to a rise in demand in Asia, a drop in gas flow in Russia, and low stocks of stored gas.

Additional pressures on the grid in this country are due to two of the State’s largest power plants being out of action for maintenance, with renewables unable to take up the slack due to unprecedented low wind speeds over the last few months.

Energy-guzzling data centres being connected up to the grid in large numbers are causing the system to creak.

All this means that any energy being produced on the system is expensive.

A spokesperson for Mr Ryan’s department said it was acutely aware of the impact on consumers of international wholesale energy gas prices.

There was no direct answer provided when the department was asked if any measures would be introduced to offset the impact of soaring energy prices on households.

However, the department said the Government provides extensive supports for household energy costs, via welfare schemes.

All funds raised by increases in the carbon tax will be ring-fenced to protect those most exposed to higher fuel and energy costs, as well as to support a just transition for displaced workers and to invest in new climate action.

Consumer energy prices are not regulated in this country.

Mr Ryan’s spokesperson said the position of successive governments has been that competitive energy markets result in greater choice in terms of suppliers, products and prices.