Household bills to climb further as businesses warn of ‘whole market dysfunction’ – The Irish Times

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Household energy bills could soar by up to €6,000 a year, according to internal government documents, as energy companies privately warn the Coalition that the costs they face could ’cause energy malfunction’ entire energy market”.

The Cabinet was warned this week that while energy prices have already doubled since mid-2021, to a level of around €4,000 a year, further increases are likely early next year.

A senior government source said the projections were “off the Richter scale” and could see energy bills look like mortgage repayments.

A note to ministers stressed that: “If the wholesale price of gas remains at the high levels expected for the coming months, further increases in retail prices can be expected, with a typical household potentially paying around €6,000 for gas. and electricity per year. The timing of these increases is unknown, but could be early in the new year. »

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The dire warnings will increase pressure on the government to support households with a massive fiscal intervention of one-off measures reaching what Tánaiste Leo Varadkar described on Friday as “several billions”.

The Cabinet was also warned that the record gas price was also putting pressure on energy companies because of the guarantee payments they have to pay to trade in wholesale markets. This was reinforced in a private letter sent by utility company Energia to senior ministers in August, seeking talks with the government on “appropriate steps” to support the sector in light of new financial risks.

Energia has told the government that the sector is facing huge new costs resulting from the need to provide “massive advance guarantee payments” to buy gas.

In the letter, seen by The Irish Times, the company warns that “Ireland should prepare for the possibility that claims for guarantees will become too large for Irish energy companies and threaten security of supply”.

The growing cost burden, the company warned, “has the potential to cause the whole of the Irish energy market to malfunction, leading to significant adverse economic and social effects, unless appropriate measures are put in place. urgently and in a collaborative and coordinated manner”. .

Although he does not explicitly say that financial support is needed, he points out that a number of European countries have introduced support for energy companies “where additional guarantee requirements would overburden the company”.

“We encourage the government to urgently engage with energy companies to address the potential issue,” he wrote.

Asked to comment, the company confirmed that it had written to the government “in relation to matters and issues of concern to the energy industry and to all energy customers in Ireland, which are also experienced in the entire Europe”.

A government spokeswoman declined to discuss private correspondence, but said the broader issue of liquidity was discussed at a meeting of EU energy ministers on Friday. “It is being considered in more detail at pan-European level over the coming week.”

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