Wholesale gas prices in Ireland have hit their lowest point since December 2021, putting pressure on energy generators and suppliers to reduce utility bills for Irish households. The price of wholesale gas dropped below €33 per megawatt hour on Friday, a significant decrease from last summer’s record high of over €305 per megawatt, which was driven by Russia’s invasion of Ukraine in February 2022. Futures markets indicate that wholesale gas prices are not expected to surge again this winter, unlike last year when Europe was forced to find alternative sources due to the lack of inexpensive Russian supplies. However, prices are predicted to rise to higher levels by December.
The decline in wholesale prices has led to questions about how quickly Irish households will see a substantial reduction in their utility bills. In the past, companies have been quick to increase prices for their customers when wholesale prices rise, but slow to pass on cuts when wholesale prices fall. The Commission for Regulation of Utilities (CRU), the regulator of firms generating and supplying electricity and gas, has stated that there is currently no evidence of energy companies failing to pass on the decline in wholesale gas prices to users.
The CRU has welcomed the drop in wholesale gas and electricity prices and continues to encourage customers to switch suppliers whenever possible. However, the regulator has also stated that retail prices may not reflect the decline in wholesale prices immediately due to hedging. It may take time for retail prices to reflect the decline in wholesale prices until sustained and further reductions in wholesale prices are seen, and the impacts of hedging work through.
Gas is a significant fuel used to generate power on the all-Ireland grid, even as demand for heating falls during the spring and summer months. This is because relatively little power is generated by wind farms during this time, following the end of the Atlantic storm season.
In conclusion, the decline in wholesale gas prices in Ireland is good news for households, who are hoping to see a reduction in their utility bills. The CRU has stated that energy companies are passing on the decline in wholesale gas prices to users, and customers are encouraged to switch suppliers whenever possible. However, it may take time for retail prices to reflect the decline in wholesale prices due to hedging, and prices are expected to rise to higher levels by December.