Wednesday 26 November 2014

Energy price war heats up as new player vows to slash bills by 17pc

Charlie Weston Personal Finance Editor

Published 29/03/2014 | 02:30

An electricity pylon in the western city of Meckenheim in this January 30, 2013 file photo. E.ON, Germany's No.1 utility, lowered the upper end of its full-year profit target range after plunging power prices and a boom in renewable energy caused nine-month profit to decline by a fifth. The group said on November 13, 2013 it now saw earnings before interest, tax, depreciation and amortisation (EBITDA) reaching 9.2-9.3 billion euros ($12.4-12.5 billion) compared with a previous outlook range of 9.2-9.8 billion.   REUTERS/Ina Fassbender/Files   (GERMANY - Tags: ENERGY BUSINESS)
An electricity pylon in the western city of Meckenheim in this January 30, 2013 file photo. E.ON, Germany's No.1 utility, lowered the upper end of its full-year profit target range after plunging power prices and a boom in renewable energy caused nine-month profit to decline by a fifth. The group said on November 13, 2013 it now saw earnings before interest, tax, depreciation and amortisation (EBITDA) reaching 9.2-9.3 billion euros ($12.4-12.5 billion) compared with a previous outlook range of 9.2-9.8 billion. REUTERS/Ina Fassbender/Files (GERMANY - Tags: ENERGY BUSINESS)
One big switch boss Oliver Tattan

HARD-PRESSED families are set to benefit from a price war on gas and electricity, as a new supplier offers to slash bills by almost one-sixth.

Consumers could shave more than €300 off the cost of heating and lighting their homes with the latest entrant eager to steal a slice of the market.

New supplier into the energy market Energia is cutting its prices for those who sign up in the next month.

Weeks after its launch, Energia upped the ante on competitors by claiming it was offering a 17pc discount on its standard tariffs for households that take both electricity and gas from it.

Energia ramped up its cut-price offerings after initially trying to lure people with a 15pc discount for those buying gas and electricity from it.

It says the average family will save €306 a year on their fuel bills.

Consumers have been hit with a series of price hikes in recent years: in the past two years, the cost of heating and lighting the average home with electricity and gas has shot up by €450 a year.

Energia offered the 17pc cut after 50,000 consumers signed up for discounts through the One Big Switch campaign – which offers consumers who sign up discount rates for health insurance, mortgages and now energy through a deal with Bord Gais.

The first signs of a price war came on Monday as Bord Gais confirmed it would offer the people who had signed up with One Big Switch a 10pc discount on their electricity supplies and €80 cash-back if they stick with the semi-state for a year.

This did not include any discount on gas prices for homeowners.

One Big Switch boss Oliver Tattan claimed a typical family would save €215 on electricity prices over a year.

However, the new discount from Energia confirms it as the cheapest for dual fuel in the Irish market, Simon Moynihan of price comparison site Bonkers.ie said.

Mr Moynihan said consumers would now be hoping that other suppliers respond also, sparking a price war.

"Energia's new offer is extremely good, and for qualifying customers it will be the best dual-fuel deal in the market. In fact, for the first time in Ireland, a dual-fuel deal from one company will be the cheapest way for an average household to get their gas and electricity."

The energy expert said a household currently supplied by Bord Gais and Electric Ireland on standard rates would pay €2,191 combined for gas and electricity for one year. With Energia's new deal, they will save €289 per year off this.

Energia boss Gary Ryan said: "Switching directly to Energia online cuts out the cost of middleman commission, so customers get the full benefit."

The new deal is open until April 17 for people who switch online – the same day the One Big Switch campaign will stop allowing people to sign up for its deal.

Energia is owned by Northern power company Viridian and has two generating stations in Dubln.

The One Big Switch campaign now has 50,000 people signed up. Mr Moynihan, of Bonkers.ie, said the electricity-only deal would be the cheapest in the market once the cash-back offered was claimed by householders. He said an average household on the One Big Switch plan would end up paying €1,094 a year.

PROFITS

And, the recent confirmation that profits at ESB had surged to more than €400m last year were also expected to fuel calls for a reduction in rates.

As the latest 23pc rise in profits comes after the company raised electricity prices for consumers by 1.7pc at the start of January - an rise of 8pc in total over the past two years.

The price rises have added around €82 to the annual electricity bill for a typical customer.

Irish Independent

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