ESB eCars

Red Silurian

https://www.boards.ie/discussion/comment/120990878#Comment_120990878

The way our market works is quite simple, we pay whatever the private companies want and when we complain about pricing they make up stuff and people lap it up. Have you ever wondered why did prices rose every 4-6 months last year despite the suppliers allegedly hedging for 12?

https://www.boards.ie/discussion/comment/120990886#Comment_120990886

Or they can keep the same consumer price and gain 20c profit. Where's the incentive not to?

liamog

When suppliers are telling press that they buy in blocks and it's being reported as such I have no reason to disbelieve them. Do you have any reasons to do so, or is just based on the fact you are annoyed prices are so high? Can you show any evidence that suppliers retail arms are making large profits this year?

Red Silurian

https://www.boards.ie/discussion/comment/120991152#Comment_120991152

I suppose the main reason I am skeptical is that despite allegedly hedging for 12 months prices rose last year 3 times with most suppliers... Something which nobody seems capable of explaining despite so many experts on here. But yes I am also annoyed at high prices

CoBo55

https://www.boards.ie/discussion/comment/120991213#Comment_120991213

Exactly, strange that other countries in Europe have been dropping their prices steadily, they must use a different hedge... Everybody knows this hedging excuse is a load of bollox.

liamog

https://www.boards.ie/discussion/comment/120991213#Comment_120991213

We don't know the hedging period, I'm guessing at 12 months based on the prices not coming down since last November. It's likely to be a set of overlapping contracts. There was an article that I can't find that discussed how UK prices were based on shorter 12-15 week purchases versus longer contracts in Ireland.

It's largely a question of balance, shorter more volatile contracts mean the customer isn't shielded from big swings whereas longer contracts can mean the supplier is stuck paying generators higher prices for longer. The whole system needs major reform as last years gas crises has exposed flaws. The regulations were designed to stabilise the relationship between the generators, suppliers, and consumers to allow for a liberalised market.

The sooner we can roll out fully indigenous sources of electricity generation the better. There's lot's of cheap energy available to us (on-shore wind, solar etc...) but people have been convinced to turn cheap sources of electricity into a left/right political issue.

CoBo55

https://www.boards.ie/discussion/comment/120991275#Comment_120991275

How is a new entrant like waterpower working? Surely they're buying their electricity from a provider who's hands are tied because of this hedging, yet wp can give a month by month rate according to market forces.

the_amazing_raisin

https://www.boards.ie/discussion/comment/120991306#Comment_120991306

Because they aren't hedging, they're giving the spot price and passing the risk onto the customer

The majority of customers want a fixed price for electricity, they don't want to wondering whether their electricity rate is going to double in a month. That requires the supplier to lock in a price for their energy supplies for several months ahead

I like the idea of agile tariffs but I'll be the first to admit they aren't for everyone

Red Silurian

https://www.boards.ie/discussion/comment/120991306#Comment_120991306

I think the theory is that the suppliers hedge their prices, not the producers... So waterpower are effectively only hedging for one month at a time in their deal with the producers in this instance, hence why the price changes on a monthly basis

Red Silurian

https://www.boards.ie/discussion/comment/120991275#Comment_120991275

Ok so back to my original question, if the hedging period is 12 months why were there 3 increases last year? Surely there would only be one in this scenario

liamog

https://www.boards.ie/discussion/comment/120991306#Comment_120991306

They don't buy from suppliers they buy from generators.

liamog

https://www.boards.ie/discussion/comment/120991426#Comment_120991426

Neither you or I know exactly know how many times a given supplier went to market to buy tranches of supply. The price charged to the consumer will be levelized based on the average cost of the hedged purchases.

In the case of a charge point operator like eCars (the consumer in this case) they're stuck paying that price to the supplier and then have to add their own markup to cover network costs and fund expansion. I'd guess that eCars are making between 12c and 15c per kWh over their wholesale price and were doing the same last year.

Red Silurian

https://www.boards.ie/discussion/comment/120991551#Comment_120991551

If your theory is correct then the suppliers locked in a 12 month price with producers last year but had 4-6 month price lock-ins before then... Which is a bit odd, when prices are increasing you'd surely lock in for less time, not more.

liamog

https://www.boards.ie/discussion/comment/120991593#Comment_120991593

Not if you want to provide certainty to your consumers. At it's core hedging is a gamble, a supplier is making a bet that the average wholesale price over the period is going to be on average the agreed the price. Sometimes you win, sometimes you lose. If prices are increasing and you think they'll increase more in 6 months then it makes sense to lock in a longer term. It's no different than a person taking out a 5 year fixed rate mortgage.

10-10-20

https://www.boards.ie/discussion/comment/120991636#Comment_120991636

True, we might actually be paying the average unit price between two or more long-hedges, one high and one lower.

CoBo55

https://www.boards.ie/discussion/comment/120991382#Comment_120991382

But we as consumers never had fixed unit rates, we had high discount deals subject to price increases which we got in spades, I had 4 increases in 9 months while with BG. I've had electricity in my name since 1988 and this is the first time I've gotten the security of a fixed price deal. The whole thing stinks to high heaven to me tbh. Why are other countries dropping their prices since January while our are static? Nobody is answering that question.

the_amazing_raisin

https://www.boards.ie/discussion/comment/120991886#Comment_120991886

Talk to these lads if you want to find out more about how energy markets work, they have the credentials and they do a good podcast

https://redefining-energy.com/

In terms of why other countries have lowered energy prices, no-one here is going to be able to give you a definitive answer but here a few of my guesses on a case by case basis

UK - has not actually lowered any energy prices, they still have the price cap to limit exposure from consumers. This is a double edged sword because they're just paying the excess through tax revenues and increased government borrowing. We buy most of our gas from the UK so we need to pay the cost of their high energy prices too

France - in summertime France has a significant amount of power from nuclear, so much they need to export a lot to Germany to keep their grid in balance. Also given the nature of the French public to protest anything and the fact that EDF is now owned by the French government, they're probably trying to push energy costs down to keep people happy (or at least at a manageable level of unhappy). Also France massively subsidises their Nuclear industry, so again consumers just pay the cost through taxation

Germany - currently getting lots of cheap electricity from France. Also they're in a recession with lower factory output meaning they've lower energy demand. They are however economically dependant on cheap gas from Russia so they're paying the price for that now. However they're in luck because they still have a lot of gas storage saved up from last year

Ireland - the "plan" as it is seems to be to keep the market system going and just bail out the consumer with credits whenever the prices go too high. Suppliers are reluctant to lower prices because they all lost money last year which needs to be recovered (whether we like it or not) and they don't want to hand out large discounts in case they get burned again

On top of that, there's a lot less competition in the marketplace, plus there's talk of more energy supports coming so they're not going to discount themselves out of free money

EDIT: Also we did have fixed rates, that's literally what the Energia EV plan was, and that's why anyone on it has been laughing the past year

CoBo55

https://www.boards.ie/discussion/comment/120992093#Comment_120992093

The energia fixed plan was only available for people with day night meters, which I think only account for around 10% of domestic consumers, great for those who got it but made extremely difficult to get by suppliers refusing point blank to submit a request to esbn for their customers. Italy and the Netherlands have been dropping their rates since January. I can't see how BG lost money anyway, my rate rose from 16.5c to an eyewatering 39.5c retention rate, their full rate was in the mid 40's and it's still there along with measly discount. How can Flogas give a 30c rate or if you're one of the lucky 10% and get 33/15c?

ted1

https://www.boards.ie/discussion/comment/120991419#Comment_120991419

producers hedge their gas or other fuel

suppliers should hedge many of the smaller ones in England failed by not hedging

https://www.fticonsulting.com/insights/articles/-/media/b0ba4325fdcb4fe2a1b941bd2ad27874.ashx

not sure about water power , never heard of them but many comp airs make losses in the first few years to gain market share

ted1

https://www.boards.ie/discussion/comment/120991886#Comment_120991886

We as an island are more exposed. We have no gas storage. We are last in along pipeline.

our power system is mainly gas

we don’t have AC interconnecters like the rest of Europe

we have the Celtic interconnectors and greenlink In development which should help , Both are DC so we still need to procure Ancillary Services , we have additional generation coming online soon

Red Silurian

https://www.boards.ie/discussion/comment/120993254#Comment_120993254

Waterpower basically buy their electricity from the market and sell to the consumer with a markup. They hedge* with the market suppliers for a month at a time and slap on a profit margin for us to pay resulting in their prices also changing for the consumer on a monthly basis but generally following the market trends both up and down

*Not sure if "hedge" is the right word to use for a monthly deal

crl84

https://www.boards.ie/discussion/comment/120991426#Comment_120991426

Because the consumer price increases weren't anywhere near the supplier price increases. Supplier prices increased FAR more than the rate of increase to the consumer.

If consumer prices were reflective of the supplier increases, then they would have increased the consumer prices far more, and probably less frequently. Instead, they increased them less than the supplier increases, and that's why consumer prices haven't fallen in line with supplier prices.

Essentially the consumer prices are being passed on on a "level pay" type of structure.

Red Silurian

https://www.boards.ie/discussion/comment/120994082#Comment_120994082

Let's take Airtricity as an example

They increased their prices on the following dates

• 1st December 2021 - 9.4%
• 1st May 2022 - 30%
• 1st October 2022 - 45.2%

So are you suggesting they made a 12 month hedge previous to December 2021, which is still in effect today but passed the full increase on to us in 3 waves last year? I'd be skeptical

liamog

https://www.boards.ie/discussion/comment/120994124#Comment_120994124

At this point your level of scepticism is verging on the conspiracy theory forum. Multiple suppliers are reporting the same reason (hedging contracts) as the reason for continued high prices, you are choosing to not believe them and have no evidence.

Until we get any evidence to the contrary bad hedging remains the most likely explanation for why eCars prices are higher this year than they were last year.

ted1

between Jan 21 and Dec 21 the wholesale rate increased by over 300%.

aug 22 is 8 times that of Feb 21.

we didn’t see those increases

https://www.semopx.com/documents/general-publications/Monthly-Market-Report-June-2023.pdf

electric Irelands first price rise was in September 21, the wholesale price had already increased by 260% yet the Increase was only 37.5%

it shows that they had been protected by hedging for several months (possible 12-18) and that there are external factors aswell such as cost of running a business which affects the retail price

Red Silurian

https://www.boards.ie/discussion/comment/120994273#Comment_120994273

But if they hedged for 12-18 months pre december 2021 why was there increases 6 and 9 months later? Surely the price agreed in the 2021 "hedge" would be active throughout 2022, no?

https://www.boards.ie/discussion/comment/120994206#Comment_120994206

Is it really in the bounds of conspiracy theories that when prices are supposedly fixed for 12 months that questions should be asked as to why prices increased 3 times in those 12 months? Not sure why you trust what those energy companies say so much

10-10-20

https://www.boards.ie/discussion/comment/120994455#Comment_120994455

You probably wouldn't hedge all of your energy needs for 12 to 18 months in one tranche. Hence what I was saying above that we probably paid a calculated average of those hedges, hence the price rises over the period.

Red Silurian

https://www.boards.ie/discussion/comment/120994473#Comment_120994473

So your theory is they might hedge half their energy needs today and then 6 months later hedge the other half, for example? That would make sense for the price rises but it doesn't explain then why prices haven't subsequently dropped since the wholesale price began dropping 12 months ago

ted1

https://www.boards.ie/discussion/comment/120994550#Comment_120994550

Prices are still over double feb 21 prices.

I would expect to see drops within the next few months.

AndyBoBandy

All this talk about hedging reminds me of a “shall remain nameless” power station in the U.K. that I dealt with over the years who hedged their gas supply for 12 months, only for one of the GT’s on-site to sh1t the bed and be unusable for about a year…. (similar thing happened in Whitegate, Cork about 2 years ago)

their gas deal was use it or lose it…..

we also offered them a spare gas turbine rotor we had lying around for £6m, but needed an answer within 3 days as another customer in Asia also wanted it, but we gave 1st dibs to the U.K. plant…. They came back 5 days later saying they wanted it, by which time it was being boxed up to be sent to Asia and a new rotor from the factory would be about £10m-£12m…. With a 6-9 month lead time…

Ah, fun times…

liamog

https://www.boards.ie/discussion/comment/120994455#Comment_120994455

Whether I trust them or not isn't the question, you have no evidence to counter the argument put forward by supply companies that hedging and forward purchase contracts are the reason we're still paying high prices. Your position is that energy companies are conspiring to keep prices high. It's almost the definition of a conspiracy theory.