Energy Costs: Suppliers Face Pressure to Raise Tariffs in February

Irish energy suppliers are expected to raise prices again in early 2027, according to Daragh Cassidy of Bonkers.ie. Cassidy predicted that major providers will likely announce another increase of approximately 10 percent or slightly more around February. This follows a wave of recent adjustments by the country's largest utilities. Bord Gais Energy, Energia, and SSE Electricity all increased their gas and electricity rates by an average of 10 percent this month. In contrast, Electric Ireland announced a price freeze for the same period.

The pressure on suppliers stems from rising global fossil fuel costs. Ongoing conflict in the Middle East has disrupted supply chains, pushing wholesale energy prices higher. Cassidy noted that while wholesale prices constitute only about one third of the total bill, a 30 or 40 percent jump in those costs will still impact consumer rates. He explained that suppliers buy energy weeks and months in advance. Consequently, the price paid by households reflects an average of wholesale market costs over several months rather than the immediate spot price.

Suppliers typically change prices only twice a year at most. This lag allows companies to absorb some financial pain before passing it on to customers. However, Cassidy argued that there is a limit to how much profit margin companies are willing to sacrifice. If current market conditions persist, the buffer will eventually run out, forcing a price hike. The volatility of global energy markets makes precise forecasting difficult, which Cassidy described as a fool's game for analysts attempting to predict exact future bills.

The duration of the war in Iran is a key variable in this calculation. Cassidy stated that the longer the conflict continues, the more likely Irish households are to face higher costs. Suppliers must balance the need to cover their procurement costs against the risk of losing customers to competitors offering frozen rates. This dynamic creates a complex pricing environment where major players often move in coordination, waiting for the wholesale average to settle before adjusting retail tariffs. The recent 10 percent increase was the first major step in this cycle.

Consumers should expect the next round of changes to coincide with the February pricing review. This timeline aligns with the standard practice of buying energy months in advance. Suppliers are currently assessing their forward contracts to determine the new baseline cost. If the Middle East conflict continues to strain supply, the wholesale average will remain elevated. This will likely necessitate a further increase in retail prices to maintain operational viability. The market is currently waiting for these forward contracts to be finalized before the new rates are officially announced.