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Electricity bills shoot up 30 per cent in a year as market costs rise

  • These changes affect customers who are on a variable rate with their provider and not a fixed-price plan

The lack of wind and rain in recent weeks is being blamed for a spike in energy costs, as electricity providers are forced to buy more expensive power generated from coal or gas.

The cost of electricity in the European open market, known as the 'pool', has risen to an average of 65 euros per megawatt-hour in the first two weeks of 2017, an increase of 8.3 per cent on the end of December.

This is translating into the highest prices for domestic consumers since December 2013. The megawatt-hour (Mwh) cost was at 75.28 euros yesterday, even rising to 88 euros for those choosing to put on the washing machine at 9am.

These changes affect customers who are on a variable rate with their provider and not a fixed-price plan.

High costs due to weather

Energy market predictions say that electricity will stay expensive for the foreseeable future. Estimates are that it will remain at 77 euros per megawatt-hour on the open market and fall to 68 towards the end of the month. This will mean that the average cost throughout January will be almost 70 euros, the highest since September 2008.

The cost of the power only makes up a third of a final household electricity bill as fixed costs such as distribution and marketing and green levies make up the rest.

If the generation element reaches the 70 euros Mwh level as expected, this will be double the cost at the same time last year. The final bill that consumers pay, with other costs taken into account, will have risen 30 per cent in a year and by 6 per cent since December alone.

The sudden increase is being blamed on the weather. With little rain and few storms, hydroelectric and wind generation is operating well below capacity. So-called green energy has made up only 30 percent of the supply so far this month, compared to a peak of 55 per cent last May.

Energy minister, Álvaro Nadal, speaking on Wednesday explained the increase was also due in part to less nuclear energy being generated in France due to recent storms and a rise in the price of oil. He admitted that there is always room for improvement in the energy market but there is not much "margin" to change the actual design of the 'pool' due to EU rules.