Energy supplier Electric Ireland had “no choice” but to increase prices after international wholesale gas prices rose by more than 1,000%, an Oireachtas committee has heard.
TDs and senators were told that Electric Ireland was “very aware” that increased prices are “difficult for customers to absorb” and that disconnections will always be a “last resort”.
Representatives from Electric Ireland appeared before the Environment and Climate Action Committee on Tuesday.
Executive director Pat Fenlon said the “unprecedented” increases in gas prices means annual costs are set to rise from 300 million euro two years ago to two billion euro this year.
“Over the last year the significant increases in customers bills have been driven by extraordinary and sustained increases in the wholesale price of electricity,” Mr Fenlon told the committee.
Wholesale gas forward prices have increased by over 1,000% over the past 18 months. This is an unprecedented level of increasePat Fenlon
“Increases in wholesale electricity prices in Ireland have been driven primarily by unprecedented increases in wholesale gas prices in Britain and across the EU, driven by concerns over European gas supply, made much more acute because of the conflict in Ukraine and reduced Russian gas supply.
“Wholesale gas forward prices have increased by over 1,000% over the past 18 months. This is an unprecedented level of increase.
“Two years ago Electric Ireland’s annual wholesale energy costs were in the region of 300 million euro. At current market levels we expect that cost to be increased to around two billion euro.”
Mr Fenlon said Electric Ireland has more than 1.1 million residential electricity customers and over 700,000 residential gas customers.
“Electric Ireland engages with any residential customer who has difficulty paying their bills, and works with them to put in place a manageable payment plan where required,” he said.
“Disconnections are and always will be a last resort.”
He added that there is a regulatory moratorium on disconnections for the winter period for vulnerable customers.
Mr Fenlon told the committee: “As we operate as a standalone energy supplier in the market, we have no choice but to increase our prices given the quantum of increases in our costs.
“ESB’s generation and supply businesses are required to operate separately so increased profits from ESB’s generation business cannot be used to offset costs incurred by Electric Ireland.”
The committee also heard that Electric Ireland recorded an operating profit before exceptional items in the first half of this year of 357 million euro, compared with an operating profit of 363 million euro in the first half of last year.