Energy companies have failed to provide an adequate explanation why consumer prices are not falling in response to a dramatic reduction in wholesale costs, the Minister for Finance has said.
Michael McGrath said he understood the complexities around how companies purchased energy and that there was a lag in the “pass through” of price decreases, but he warned that this adjustment was taking too long in Ireland.
The Minister was responding to a call from Sinn Féin’s Pearse Doherty for the Government to support an investigation by the Commission for Regulation of Utilities into the pricing issue.
Mr Doherty said in the year to March, consumer energy prices rose by 72 per cent while wholesale costs decreased by 50 per cent in the same period.
“Minister, the time for sitting on your hands is over,” the Sinn Féin TD said during Leaders’ Questions in the Dáil.
“Families, customers, businesses are being fleeced. So will you support Sinn Féin’s call for the energy regulator to take this matter seriously and carry out a proper, intrusive investigation into the prices that Irish customers are being charged, and have your Government called in the energy companies to discuss this matter with them?”
Mr McGrath responded: “It is my view that we have not to date had an adequate explanation for the delay in the pass through of those reductions.
Despite wholesale energy prices falling significantly in the past several months, retail prices facing households remain stubbornly high. Central Bank data published yesterday shows how Irish electricity prices have fallen at a much smaller speed than in the rest of Europe... pic.twitter.com/rWcu4uyuNU
— Pearse Doherty (@PearseDoherty) June 22, 2023
“We all understand there is complexity. We understand there is a lag, we understand futures contracts and hedging instruments that commercial companies enter into.
“That said, there is undoubtedly scope over the weeks and the months ahead now for the energy companies to reduce the prices that consumers are being charged.”
The Minister made clear that the Government did not have a role in setting prices.
“We’re not responsible for energy pricing,” he said.
“But we of course have responsibility in terms of the overall environment within which these prices are being set.
“We absolutely have an obligation to call out where we see it that there is a justification for a greater pass through to the consumers at a retail level of the dramatic reductions that there have been at wholesale level.
“I’ve no doubt that they will come but they need to come quickly because it shouldn’t fall on taxpayers to be stepping in and supporting households who are paying higher prices than the market justifies at this time.”
