The price of gas and electricity on wholesale markets fell dramatically in 2019 with the price falls continuing into the New Year. The question now is whether the savings will be passed on to hard-pressed consumers?
While wholesale energy prices are notoriously volatile, the trend for the past 12 to 15 months has been one of decreasing prices. Not that you would have seen it reflected in your bills!
In fact according to the latest energy market review from Naturgy, gas prices fell by over 40% in 2019 compared to 2018, reaching a 10-year low. This trend continued into January with prices falling a whopping 52% year-on-year and a significant 13% from December alone.
It’s been the same story for electricity with prices falling 47% year-on-year in January and 7% compared to the month before.
Why are energy prices falling?
Gas prices are falling due to an abundance of supply as well as a far milder than average winter across most of Europe which has lessened demand.
The coronavirus outbreak has also had the impact of decreasing energy demand in the Chinese market as the economy there, the world’s second largest, begins to stutter.
Meanwhile electricity prices have fallen partly due to the continued increase in wind output as well as the fall in the price of gas, which still makes up over 40% of our electricity generation.
What’s been the impact on consumer prices?
Little so far.
Back in 2018 and early 2019 all the major energy suppliers announced a raft of price increases on the back of a rise in wholesale prices which added over €200 to the average customer’s annual gas and electricity bill. However these price increases have now been fully reversed and have been for several months. Customers are therefore right to ask why we haven’t seen these decreases passed on.
There are now more energy suppliers than ever operating in the Irish market and quite often when one announces a change in price the others quickly follow. However all seem to be staying put for the time being.
But with the outlook for energy prices rather benign at the moment, it’s probably a matter of when, not if, prices decline in 2020.
Don’t wait - switch and save today
While existing customers haven’t felt the impact of lower wholesale energy prices yet, customers who are prepared to switch will get better value than ever as there is huge competition for new business at the moment. Discounts of up to 30% for a year on gas and electricity are now available which could save someone almost €400 on average on their annual energy bills.
Switching is quick and easy and can all be done online on bonkers.ie in the space of a few minutes.
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