Families could face annual energy bills of €4,700 following hike

Homes and businesses should brace themselves for further energy price surges and possible shortages this winter, industry figures warn as Europe’s gas crisis continues.

The Republic depends on natural gas for electricity, to fuel industry and heat homes, but Europe faces shortages of the fuel as its biggest supplier, Russia, has slashed volumes, sending prices to record levels.

Russia’s move prompted industry veterans Gerry Duggan and Don Moore to warn that the Republic risks energy shortages this winter, while Daragh Cassidy of price-comparison website Bonkers.ie said the next round of increases would add €400 a year to gas and electricity bills.

Mr Cassidy predicted families would pay about €2,500 a year for electricity and up €2,200 for gas following the hike. He pointed out Flogas and Panda recently boosted prices to those levels.

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He speculated that Electric Ireland, Airtricity, Bord Gáis and Energia would follow suit. Domestic energy prices are about 50 per cent higher than 12 months ago.

Mr Cassidy added that further increases would follow, and argued that the Government should stall its plans to reverse a temporary 4.5 per cent cut in VAT on energy bills next October.

Restoring the 13.5 per cent rate would “have a huge impact on people’s pockets”, he said.

Mr Duggan, a former ESB International executive, who has represented the Republic at the EU and International Energy Agency, warned there was a real risk of shortages.

“Everyone is alarmed, except our Minister,” he said. Mr Duggan explained that the Republic buys 75 per cent of its gas from the UK, which will switch from exporting now to importing in winter, when the fuel is needed to heat homes, pushing prices up further.

Norwegian question

The UK imports much of its gas from Norway’s Ormen Lange field, whose pipelines also feed the EU, which is desperate to source new supplies for industries and homes this winter.

“A lot will depend on the attitude of the Norwegian government to the EU versus the UK if the EU comes knocking on its door,” Mr Duggan said.

He suggested Norway, part of the European Economic Area, could feel its interests lay more with the EU.

Gas shortages would hit electricity generators, pharmaceutical makers and dairy processors, which Mr Duggan said suppliers regarded as “interruptible” customers.

Gas companies could favour households, classed as “non-interruptible”, as their supplies must be maintained constantly for technical reasons.

Mr Moore, who chairs the Irish Academy of Engineering’s energy and climate action committee, said Ireland faced the consequences of successive governments’ “reckless” policies.

“We are completely dependent on Britain at a time when Britain seems to be going out of its way to antagonise the EU in every possible way,” he added.

Mr Moore, a former ESB International chief executive, pointed out that the Republic was the only EU member state with no gas storage, while governments have failed to ensure we have alternative sources, including liquefied natural gas.

Government’s options now include ensuring that all three generators in the ESB’s coal-burning Moneypoint plant can produce electricity. The company also needs to bring its oil-fuelled Tarbert power station back online, Mr Duggan said.

He added that gas plants could convert to distillate, which the National Oil Reserves Agency could supply. However, the agency would have to transport most of that in oil tankers, and the Republic was short of them.

The Commission for Regulation of Utilities, responsible for energy security, said it was working with the Department of Environment on an emergency response.

ESB said it would continue to support the electricity system by “maximising the availability of its plant for the remainder of the year and winter ahead”.

The Department of Environment did not comment.