Existing suppliers will face tough competition
GOOD news for financially squeezed families is thin on the ground these days.
Bills have been rising relentlessly, whether they are for property tax, health insurance or banking charges.
Energy is one of the big costs of running a home and the price of electricity and gas has been going up.
This is despite the opening up of the electricity market to ESB rivals Airtricity and Bord Gais. Electricity prices have been kept high here for years by the regulator in order to attract new players.
On the face of it, the gas market should be highly competitive, with Airtricity, Electric Ireland and Flogas competing with the dominant player Bord Gais. Despite the competitive pressure, however, prices have remained stubbornly high.
So the arrival of Energia into the domestic residential electricity and gas market with a low-cost offering is set to be a welcome fillip for under-pressure householders.
From next week, Energia will be aiming to be the lowest-priced operator in the hope that it can sign up thousands of householders who are hungry for better value.
It is expected to be at least €150 a year cheaper for electricity for families than the standard tariff from Electric Ireland. On the gas side, it is set to offer similar discounts.
To gain from these deals, householders will have to sign up for direct debits and receive their bills electronically, which is standard now in the market. Suppliers are making householders sign up for a year, sometimes two years, to get discount deals.
Simon Moynihan of price comparison site Bonkers.ie feels the new player has the potential to put pressure on the existing operators to at the very least stop hiking prices.
The new entrant, which is part of the Northern-Ireland based Viridian group, may even force some lower priced deals to be offered by its competitors.
The big question is: will consumers get over their inertia and make the switch?
Only around 16 out of 100 consumers have moved their electricity and gas accounts to a different company, research by the National Consumer Agency has found. This is despite the fact that annual gas prices have risen by €250 in past two years.
Moving energy supplier is relatively easy and can be done with one phone call.
From next week, consumers will not be able to blame a lack of competition for high energy prices.