Energy Prices: Where is it all going to end?

[Diddles]

The Energy Regulator, Tom Reeves, is expected to announce electricity price increases of up to 20% taking effect from 1 January.
Mr Reeves may also formally sanction a 34% increase in gas prices from the 1 October.

The above is taken from the Rte website.
This country is offically the biggest rip off in the modern world.
What amazes me is that we will accept this and mid 2007 we will be hit with another hike.
There is a lot to be said for leaving here and setting up in a sunnier country where the cost of living is manageable.
I fear for young couples who are on the breadline already having purchased a home.They are having to deal with mortgage hikes every other week and now this

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[Purple]

Re: where is it all going to end??????

The wholesale cost of oil and gas are beyond the control of anyone in this country (though the tax on them could be reduced). The same goes for interest rates.
I do not understand the Irish obsession with owning a home. If people think they need to buy a house in an over inflated market for no other reason than "it's good to own bricks and mortar" then the government isn't to blame. You cannot legislate for stupidity.

 

[Ron Burgundy]

Re: where is it all going to end??????

The wholesale cost of oil and gas are beyond the control of anyone in this country .

hmmmm, perhaps if a certain gas field off the west coast wasn't given away by a certain former minister then we cold set gas prices lower.

 

[Diddles]

Re: where is it all going to end??????

Purple,
You think these sort of increases are justified?
When oil decreases in price will the Electricity and gas also come down in price?I think not

 

[Humpback]

Re: where is it all going to end??????

Purple,
You think these sort of increases are justified?
When oil decreases in price will the Electricity and gas also come down in price?I think not

Probably not, but I think the regulator does a job in managing the constantly increasing prices of oil and gas versus increases in ESB charges.

If the ESB were to track their prices with the prices of their raw materials (oil and gas) in the same way that other manufacturers do, then prices would have increased 40% since the last price rise, not the 20% which the ESB is likely to be allowed now.

Though, this disparity doesn't seem to have impacted the company, reporting 2005 profits of €240m.

 

[annR]

Re: where is it all going to end?

I don't understand the justification for passing price increases on to the customer when they are making that much profit. Have they absorbed any of it?

 

[autumnleaf]

Re: where is it all going to end??????

You think these sort of increases are justified?

Yes.

There are lots of things we can blame on the current govt and semistate bodies, but the price of energy is not one of them.

We could try to reduce our reliance on energy sources that come from dodgy parts of the world and aren't doing our environment any favours, but this would be a long-term rather than a short-term plan. Renewable sources are worth investing in but the technology is still in its infancy. Conservation efforts are not politically popular unless in emergency situations (such as California in the early 2000s and much of the world in the 1970s). No Irish political party will touch nuclear power with a barge pole.

I plan to replace all regular-use lightbulbs with compact flurescents, get a nightsaver meter, only wash clothes when i have enough for a full drum, and minimise use of the dryer. Hopefully this will minimise any impact of price increases.

In real terms, i expect energy to rise over the next few years. Maybe a few temporary dips, but the overall trend is up i fear.

 

[Purple]

Re: where is it all going to end??????

If the ESB were to track their prices with the prices of their raw materials (oil and gas) in the same way that other manufacturers do, then prices would have increased 40% since the last price rise, not the 20% which the ESB is likely to be allowed now.

At the risk of sounding dismissive, that's rubbish.
The price of internationally traded goods are not set by the input costs in Ireland, they are set by input costs in China, India or wherever the cheapest production is available.

In my business the average raw material costs have gone up by 26% so far this year. Labour has gone up by 8% and all of our other costs (insurance, utilities etc) have also gone up.
Despite this our product prices have not gone up (and in some cases have dropped) and we are more profitable and have a higher turnover than last year.

 

[WarrenBuffet]

Re: where is it all going to end??????

Though, this disparity doesn't seem to have impacted the company, reporting 2005 profits of €240m.

Are people aware that the government take a large portion of any profits from the ESB each year in the form of a dividend?

Rather than availing of this stealth tax (of sorts) could this money not be used to help alleviate the huge price increases instead?

 

[Humpback]

Re: where is it all going to end??????

Are people aware that the government take a large portion of any profits from the ESB each year in the form of a dividend?

Rather than availing of this stealth tax (of sorts) could this money not be used to help alleviate the huge price increases instead?

I suppose that's what I was trying to allude to. The government will take some of this money presumably as a dividend, while they'll already have taken their cut from us directly in the form of VAT.

 

[Humpback]

Re: where is it all going to end??????

At the risk of sounding dismissive, that's rubbish.
The price of internationally traded goods are not set by the input costs in Ireland, they are set by input costs in China, India or wherever the cheapest production is available.

In my business the average raw material costs have gone up by 26% so far this year. Labour has gone up by 8% and all of our other costs (insurance, utilities etc) have also gone up.
Despite this our product prices have not gone up (and in some cases have dropped) and we are more profitable and have a higher turnover than last year.

But why then are retailers and restaurants in Ireland telling us that they're keeping having to increase their prices because of the increases in prices for the items their buying to sell on to us?

They're telling us they're having to increase their costs because they're margins are being squeezed. But you're telling us you're not increasing prices. Are these people lying to us about why their increasing prices?

 

[MOB]

Re: where is it all going to end?

"hmmmm, perhaps if a certain gas field off the west coast wasn't given away by a certain former minister then we cold set gas prices lower."

I like this logic. Perhaps if we charged the oil companies more for oil and gas, the price to the final consumer would come down.

 

[CGorman]

Re: where is it all going to end??????

Though, this disparity doesn't seem to have impacted the company, reporting 2005 profits of €240m.

€240m on turnover of €2bn+ is only a margin of 10% or so (depending on how big the plus is). That's not unreasonable at all. Remember the ESB needs funds for investment all the time. And there's a massive pension fund deficit. So I think it is justified. Scottish Power have a margin of about the same, and they operate in a competitve market.

 

[bearishbull]

Re: where is it all going to end?

The employees in esb are wildly overpaid. Electricity is 50% more here than in uk where the private sector runs things. Privatise and dont give the workers/unions the shares like they did with eircom, aer lingus etc although i think they already have a share in the company

P.S you dont look at the profits relative to sale but rather as a percentage of capital employed. They do need to make profits to replace the capital intensive machinery plants etc.

 

[bearishbull]

Re: where is it all going to end??????

€240m on turnover of €2bn+ is only a margin of 10% or so (depending on how big the plus is). That's not unreasonable at all. Remember the ESB needs funds for investment all the time. And there's a massive pension fund deficit. So I think it is justified. Scottish Power have a margin of about the same, and they operate in a competitve market.

The % net profit being equivalent to scottish power is easy when your a monopoly! That scottish power can make the same profit margin in a competitive market shows how inefficient esb are.

 

[Dipole]

Re: where is it all going to end?

Government are to blame because they allow the wages in the ESB to be so high in comparission to the average industrial wage.
Government are to blame because they insist on extracting profits from the company rather than lowering cost of service to the consumer or investing in more efficient plants.
Government are to blame because they drag their feet on privatisation of the industry.
Government are to blame because they maintain universal service obligations.
Government are to blame because rather than investing in sustainable or local sources of electricity they allowed gas fired and oil fired stations to be built in preference to increased wind and peat generation.
At the moment there is a capacity deficit which is being met by diesel generators because the government won't approve capital spending; they are waiting to privatise the industry but dragging their feet on privatisation.
Government are to blame because they won't decommission old inefficent plants because of industrial relations problems - basically the unions run the company while the management are asleep at the wheel. Top management in ESB don't do anything to improve the service because doing nothing doesn't get them fired, doing something controversial does.
Government are to blame because they don't promote energy conservation measures, all they do is run some adverts to make it look like they care.
Government are to blame because they appointed an incompetent impotent regulator to be the fall guy.

Really if the PDs were sincere in their policies they would have got the ESB privatised back in 1997 on entering Government. I expect nothing of FF and FG but to follow the path of least resistance.

In short, Government are to blame.

It maddens me to see how much cheaper electricity is in the UK per Kwh and don't get me started on the standing charges.

 

[Guest127]

Re: where is it all going to end?

petol in my local petrol station is down by approx 10c a litre in the past fortnight. still up on last year but dont think its 20% up on the year. advice to anyone with inefficient insulation or heating systems. insulate and make heating system more efficient. I have already posted elsewhere how my esb has actually fallen in the past two years ( basically changed from gravity tank in attic to pressure system= lots of hot water all the time). we might not be able to control the price of electricity we use but we can certainy have a go at the amount we use. I am now in the process of putting in a power shower and taking out an electric shower to make better use of the hot water. ( still have one electric shower which I sincerely hope will get a lot less usage this winter)

 

[Delboy]

Re: where is it all going to end?

is'nt the average wage in the ESB over 70k!!!!! Thats just ridiculous....why does'nt the regulator try and get the costs down by using price increases as leverage.
Do they even have to pay into their pensions or for healthcare......

 

[SineWave]

Re: where is it all going to end?

And there's a massive pension fund deficit

Dead right there is. Hard enough to allocate money towards pension when faced with these type of energy costs.

It's surprising they don't itemise it on their bills as they do "STANDING CHARGES". Is that for the time the meter reader spends standing when he does call?

 

[wiggzie]

Re: where is it all going to end??????

If the ESB were to track their prices with the prices of their raw materials (oil and gas) in the same way that other manufacturers do, then prices would have increased 40% since the last price rise, not the 20% which the ESB is likely to be allowed now.

WRONG...Raw material/fuel costs account for less than 50% of the cost of generating electricity, so for example a 40% increase in oil prices should lead to a MAXIMUM of 20% increase in electricity prices.

ALSO the ESB has a range of power station types - oil, gas, coal, peat etc. Not all fuels have increased in price or have increased by a much smaller margin - in particular coal and peat, so this further reduces the raw material cost increase.