# 22% Rise in Gas Prices "approved" by Reg - how can this be?!!



## onq (28 Jul 2011)

I can't see another forum more suitable but happy to take direction on this.

I read this this evening

http://www.thejournal.ie/energy-regulator-backs-22-per-cent-gas-price-rise-188808-Jul2011/
*Energy regulator backs 22 per cent gas price rise 6 per cent lower than the increase suggested by Bord Gáis itself, *

[broken link removed]*
**Regulator backs 22% gas price rise
*
How can this be justified in the middle of a recession?

On top of 12% increase in Electricity prices?

Is this regulator and Bord Gais who allegedly made a massive profit last year trying to break the back of the country and the electorate?

Is this someone's idea of a joke, or to see if we'll finally riot or attack someone because we're driven to distraction?

What scintilla of justification can there be for this price rise?

Why isn't Bord Gais absorbing any supply side increases, because we sure as heck cannot.

This is just going to force more homeowners into arrears on bills.

I'd be interested to hear others opinions.

ONQ.


----------



## ajapale (28 Jul 2011)

Moved from  Other financial issues to  Home energy. Please post in the correct sub forum. If you are unsure then just search a few key words and this might give an indication of where to post.


----------



## DrMoriarty (28 Jul 2011)

Unfortunately, all the other providers will follow suit pretty soon. BG is just the first to announce it.

I've recently "big-switched" back to an ESB/Flogas combination, as have many others: Bord Gais loses 129,000 accounts in last 18 months.


----------



## ajapale (28 Jul 2011)

onq said:


> What scintilla of justification can there be for this price rise?




A few scintillas:



steep climb in wholesale prices since the start of the year.
growing problem of bad debts
increased costs associated with the managing the administration of payments.


----------



## onq (28 Jul 2011)

Thanks for relocating my post Ajay.

I didn't post it to the misc forum without a lof of thought.
This is basically about utilities bills, not installations, installers or anything to do with servicing of same.
I had considered home energy, initially, but I felt it was a bigger issue of finances even though it centred on energy issues.

I had, through posting on Home Energy previously, formed the opinion that the Home Energy forum was for issues relating to the provision of home energy and this was not the substance of my concern, which centred on the effect of the increases on household finances, and therefore was a matter for a financial forum.

I am concerned that there will more utilities bills increases in the coming year and I am of the opinion that ideally there should be a forum highlighting these issues, which were pointed to last year as costs centres which the government had some control over and which had bucked the market trend of returning to affordable levels by continuing to rise.

So there is a political as well as a financial aspect to this issue and therefore I am not sure "Home Energy" is the appropriate forum at all. I am not trying to be difficult or question your authority as moderator or the current make up of the forums on AAM, but AAM has shown flexibility in the past in relation to issues of concern to the general public.

With significant numbers of households in arrears of two months on their utility bills I believe a separate forum or sub-forum may be appropriate but I will leave you to consider that with the other moderators and the site owner.

Naturally if such a forum exists already my apologies and please direct me to it.

ONQ.


----------



## DrMoriarty (28 Jul 2011)

Meanwhile, back at the ranch... the [broken link removed]t for last year don't show as steep a drop in profits as they are claiming, or am I reading them wrong?

Michael O'Sullivan certainly comes across more bullish [broken link removed]. But then he would, wouldn't he?

More from d'Indo: Selfish truth behind the rise in gas and electricity prices


----------



## theresa1 (28 Jul 2011)

Listening to the report on the RTE News at 9pm you would think that Flogas does not exist as a provider of Gas - very poor reporting from RTE. Martina Fitzgerald also said only 110 Bord Gais Customers are in arrears - yes 110.


----------



## RMCF (29 Jul 2011)

How can this be?

Its simple economics.

The likes of BG and ESB are being charged more for gas etc, so they have to pass it on to the customers. Providers all over, not just in Ireland, are increasing their prices, recession or not.

They aren't charities.


----------



## Mpsox (29 Jul 2011)

My understanding is that they actually originally asked for a 28% increase, based on their calculation that wholesale gas prices have risen in excess of 35% in the past year. They were also asking for an allowance for bad debts whihc the regulator refused to include


----------



## QED (29 Jul 2011)

RMCF said:


> How can this be?
> 
> Its simple economics.
> 
> ...


 

But they should not have the same pressures to make a profit. I _think_ Bord Gais and ESB are still owned by the Irish State and they could survice as a non-profit Organisantion (i.e. take in enough income to cover day to day expenses plus investment in Grid / network). 

The price is kept artifically high by a Regulator to encourage competition and 'benefit' customers.

The price increase is really just another stealth tax.


----------



## horusd (29 Jul 2011)

How's the Corrib gas pipeline coming along? Not that it will be any cheaper I suppose. As there is a consulation period before this rise applies, will there also be a similar consultation period if/when the other's ask for a hike?


----------



## Mpsox (29 Jul 2011)

QED said:


> But they should not have the same pressures to make a profit. I _think_ Bord Gais and ESB are still owned by the Irish State and they could survice as a non-profit Organisantion (i.e. take in enough income to cover day to day expenses plus investment in Grid / network).


 
Yes they could, however given that a chunk of the profits they make are paid over to the state, were that to stop, the state would need to find the money elsewhere, either via more cuts or taxes.
having said that, I would like to understand what efforts the utility companies are doing to kepp the costs under their control (eg wages) down


----------



## colm5 (29 Jul 2011)

onq said:


> I'd be interested to hear others opinions.
> 
> ONQ.


 
We import most of our energy, so being in a recession doesn't really matter.Gas/oil prices have risen internationally.

We, in Ireland, have relatively cheap energy compared with other industrised nations, particularly when you take our location into account.

Gas prices have been rising for circa 6 moths so BG must have absorded significent costs so far.


----------



## RMCF (29 Jul 2011)

QED said:


> But they should not have the same pressures to make a profit. I _think_ Bord Gais and ESB are still owned by the Irish State and they could survice as a non-profit Organisantion (i.e. take in enough income to cover day to day expenses plus investment in Grid / network).
> 
> The price is kept artifically high by a Regulator to encourage competition and 'benefit' customers.
> 
> The price increase is really just another stealth tax.




Wholesale prices have gone up 35%.

BG are allowed to raise prices by 22%.

Sounds to me like they are absorbing some losses in that simple maths.


----------



## Jim2007 (29 Jul 2011)

RMCF said:


> The likes of BG and ESB are being charged more for gas etc, so they have to pass it on to the customers. Providers all over, not just in Ireland, are increasing their prices, recession or not.



I have my doubts about this, of course it depends on where you source gas, but  US Natural Gas prices have actually fallen over the last 12 months and while Russian Natural Gas prices have been a bit more bumpy, over all they are down too.

My supplier here in Switzerland, sources mainly from Russia and we've seen no price changes of the past 12 months.

Jim.


----------



## pudds (29 Jul 2011)

Am I right in saying that the regulator now only has *one* company (Bord Gais) to regulate for as all the others have been deregulated, if this is the case is there really any need for them anymore.

On radio today he said that Bord Gais had asked for 28% but we thought this was too high so are considering a 22% increase.

Does he not realize that campanies alway ask for more than they expect to get anyway.


----------



## RMCF (30 Jul 2011)

Jim2007 said:


> I have my doubts about this, of course it depends on where you source gas, *but  US Natural Gas prices have actually fallen over the last 12 months and while Russian Natural Gas prices have been a bit more bumpy, over all they are down too.*
> 
> My supplier here in Switzerland, sources mainly from Russia and we've seen no price changes of the past 12 months.
> 
> Jim.



I am only going by what I read in various news media, such as the BBC etc. 

All mention that wholesale gas prices have risen this last year. Are the providers lying about what they pay for energy before passing it on to us?

Here's a few recent stories:
http://www.bbc.co.uk/news/world-europe-jersey-14275585

http://www.bbc.co.uk/news/business-14294396

http://www.bbc.co.uk/news/uk-wales-14231284

http://www.bbc.co.uk/news/business-14230120


----------



## onq (30 Jul 2011)

Jim2007 said:


> I have my doubts about this, of course it depends on where you source gas, but  US Natural Gas prices have actually fallen over the last 12 months and while Russian Natural Gas prices have been a bit more bumpy, over all they are down too.
> 
> My supplier here in Switzerland, sources mainly from Russia and we've seen no price changes of the past 12 months.
> 
> Jim.




Thanks Jim,

Your commends on other threads have always been on the ball, even if we sometimes don't see eye to eye I respect your views and have learnt a lot from reading them, and my limited understanding of the market is what prompted this thread.

Its disturbing to contemplate a regulator who doesn't have at least the same overview of the market as you do, and cannot seem to see that in a recession, all prices must eventually fall.

It was commented on in other forms and AAM that of all the bills people pay, the utilities seemed to be going up unilaterally, whereas others were responding to market forces.

On the face of it, and without suggesting any impropriety on the part of any organization, regulator or group, the rise in prices where other markets are flat of falling appears to suggest a lack of aggressive sourcing and dealing on the part of the supplier and a significant disconnect (sic) with what their consumers are going through at the moment.

It may also suggest the makings of a cartel in utilities pricing, but that is not strongly supported by what I've read in the contributions to this thread, for which I thank everyone who has posted - its just a suspicion.

Ireland is still paying hugely for consumables for which there is a discretionary spend and that's fair game, but regulators and the government need to take a long hard look at semi states and others who may not be giving best value for money on items which are necessities, and energy -electric or gas - is not a discretionary spend.

ONQ.


----------



## RMCF (30 Jul 2011)

Is there a conspiracy at work here?

Wholesale prices are either going up or they aren't. Why are the media reporting that they are if they aren't?

Starting to stink a bit like the petrol prices, which rise when the price of a barrel of oil is falling. 

Does oil/gas/energy not obey the laws of economics because they suppliers realise we all need them and simply can't decide to say 'I'm not buying that'?


----------



## bullworth (30 Jul 2011)

Given that home heating has become a necessity if one does not wish to freeze to death during our worsening winters, how can the government justify taxing it so much? Carbon tax on someone trying to keep the chill out of their bones to try and encourage them to freeze to death is a joke. The Carbon tax is supposedly based upon some moral ideology but a morality questionably without foundations as the alternative is hypothermia.


----------



## Complainer (30 Jul 2011)

If you have strong views on the proposed price rise, you can submit your views to the CER consultation process;


----------



## ontour (30 Jul 2011)

15% of volume consumption of Bord Gais sales is to residential customers, the rest to industrial, power gen etc.  Cost of sales is 2010 was €924m.  At a guess 75% of this is the purchase of gas ( would welcome better info!).  So that would give about €100m being spent on purchase of gas for residential business.

Probably lots of flaws with the above calculation but with 2010 operating profits of c.€200m, could Bord Gais absorb €35m rise in the price of raw materials for residential gas customers?  I'm only saying


----------



## colm5 (30 Jul 2011)

Jim2007 said:


> I have my doubts about this, of course it depends on where you source gas, but US Natural Gas prices have actually fallen over the last 12 months and while Russian Natural Gas prices have been a bit more bumpy, over all they are down too.
> 
> My supplier here in Switzerland, sources mainly from Russia and we've seen no price changes of the past 12 months.
> 
> Jim.


 
The US now exports gas due to 'fracking' and therefore can control their prices internally. Thus no increases.
Swiss companies may have hedged gas for longer than BG as they may be able to afford to do so.

I think this says it all
[broken link removed]


----------



## Jim2007 (30 Jul 2011)

OK, had a long chat with SWMBO about this as she is the one paying the bills and it seems I was missing an important part of the equation: in most countries retail gas prices are pegged against crude oil prices!!!

Now I'm having a hard time getting my head around this, but if you look at the chart for Brent over the past 12 months sure enough the price has been rising!

SWMBO, although often confusing is seldom wrong and this link on the [broken link removed] posted by another OP, seems to suggest the oil prices do play a role in the over all calculation!

SWMBO, also tells me that the Swiss boys have been involved in massive hedging over the past while, which is why we are not seeing any price increases here yet - I hate the 'yet' bit!!! 

If this is really the case, then who is making all the money in this game???

Jim.


----------



## colin79ie (31 Jul 2011)

colm5 said:


> We, in Ireland, have relatively cheap energy compared with other industrised nations, particularly when you take our location into account.



Can you clarify?


----------



## colm5 (31 Jul 2011)

I think this shows our prices are average or below that

http://www.energy.eu/#Domestic


----------



## phester (2 Aug 2011)

statistics although correct in what they are reporting are always used to represent something they are not designed to compare.

For example the gas and electricity prices per KWH are great but what do other countries charge for the "Standing charge" and now the extra charge/lack of discount for not singing up for DD and CC processing charges. I would be fine with DD except they take what ever they estimate the bill to be and if an error should occur it is up to you to do all the chasing and still you will NOT get your money back. They will credit your bill with the amount. 

My friend had 2K taken from his account in a transaction error and it took him 2 months of hounding to get the amount corrected. 

Anyway now im rambling. Im just saying id like a cost comparison done with all stealth taxes, car tax, VRT fuel tax, Poll tax or house charges etc on a european level to be compared and then we start to talk.


----------



## colm5 (2 Aug 2011)

Well, don't agree. Standing charges represent the cost of developing infrastructure, Price per kWh presensent the cost of generating and delivery of energy.

Plus, these are not statistics, they are costs.


----------



## corkrebel (3 Aug 2011)

> Well, don't agree. Standing charges represent the cost of developing infrastructure, Price per kWh presensent the cost of generating and delivery of energy.
> 
> Plus, these are not statistics, they are c


osts. 

But you are aware that the standing charge now varies from supplier to Supplier, so ESB charge a lower rate that Airtricity for sc and I read or heard that with the New BGE increase their standing charge is going up by 12% as well. Personally this is one of my big bugbears. Company A can say we are only chargine say 10c per unit but if their standing charge per day is significantly dearer than Company B its meaningless


----------

