Hard-pressed households are set to receive some relief after the country’s largest electricity supplier announced another price cut just days before the European Central Bank (ECB) is widely expected to cut interest rates.
It also comes in advance of the Budget on October 1 where the Government is set to unveil €6.9bn in new spending of which €1.4bn will go towards a tax package.
On Thursday, Electric Ireland announced it will be cutting prices for residential electricity and gas customers by 3% and by 5% for all those on its Smart Meter Tariff Plan.
Customers on the Smart Meter Tariff Plan will see their bills decrease by between €64 and €75 annually depending on their plan while all other customers will save an average of €45 on their electricity and €40 on their gas.
The company also said it will be absorbing the recently announced increases in network charges — which have been mandated by the Commission for Regulation of Utilities (CRU) to pay for investments in the country’s energy networks. That would have cost customers on average €101 over the course of the year.
This charge is due to come into effect on October 1 along with a PSO Levy — which will go towards the generation of electricity from sustainable and renewable sources — which will add €3.23 a month to bills.
The price reductions will be applied to all existing and new residential customers and will come into effect from November 1. The company has over 1.1 million residential customers.
This is the third price decrease Electric Ireland has announced since November last year as the wholesale cost of electricity continues to fall. Earlier this summer, SSE Airtricity announced price cuts from July 1 but this was before the CRU imposed the additional charge.
Daragh Cassidy of price comparison website Bonkers.ie said he expects other energy providers to come out with similar announcements saying they will also absorb this new CRU network charge.
“They may or may not reduce prices slightly. I had hoped that we might see prices fall again by maybe 10% to 15% before the end of the year but then the big grid fees, sanctioned by the CRU, kind of put that into doubt,” he said.
“There was room for another very, very small price cut but the increases on the other end limited the price decreases.”
With energy prices coming down, it is unlikely that the Government will introduce more energy tax credits during the budget in a few weeks’ time.
However, the understands that households will avoid a further hike in winter energy bills, as the Government is set to extend the reduced rate of Vat for gas and electricity in the upcoming budget.
Unfortunately though, carbon tax is set for an increase on October 9 of €7.50 a tonne adding 2.1c per litre of petrol and 2.5c per litre of auto diesel.
On September 12, the ECB meets to discuss whether to cut interest rates again following an initial cut of 0.25% in June. Another rate cut, of potentially 0.25%, would immediately be felt by customers on a tracker mortgage.