Pre-pay energy is catching on but is it cheaper in the long run?
Do the costs in prepaid energy detract from its overall value, asks Aideen Sheehan
As we face into the winter, households across the country will be looking at ways of managing their home energy costs.
And thousands of families across the country have decided they no longer want that sinking feeling when a sky-high electricity bill lands on the doormat.
There has been a flood of consumers switching to prepaid electricity in recent months as people opt to try and control their energy spending. The latest figures from the Commission for Energy Regulation reveal that over 5,000 households a month are now switching to prepaid electricity.
This is a trend that's intensified since the start of the year when new player Pinergy.ie entered the prepaid market and Prepaypower.ie launched a major marketing blitz to persuade customers to sign up.
Pinergy now has over 5,000 customers, while PrePayPower took on 4,450 new ones in June alone and now has well over 20,000 households signed up since it started up in the domestic market in late 2011.
But does prepaid electricity add up?
Basically customers sign up with Pinergy or PrePayPower and get a meter installed for which they purchase credit at Payzone outlets, by phone or online.
They then enter their validation code on the home meter to update the credit – and get continuous feedback on how much credit they have left and how much electricity they've used in the last day, week and month.
Their electricity charges are matched to standard ESB Electric Ireland rates – currently €0.1928 per unit.
They then also pay the same standing charge of €126 a year in urban areas and €170 in rural areas, as well as the PSO levy of €31.60 a year – due to rise to €43 for everyone next month.
They then pay an extra 37.5 cent per day as a prepayment service charge which adds up to €137 a year.
Enda Gunnell, of Pinergy.ie, said that while this was an additional charge it reflected the cost of the prepay equipment, while the constant home monitoring of usage encouraged consumers to stop wasting energy.
"Research internationally shows people can achieve fairly significant savings by choosing this system," he said.
You are also guaranteeed that even if you run out of credit you won't see your supply cut off at nighttime, over the weekend or on major public holidays such as Christmas or New Year.
But Simon Moynihan, of energy comparison site Bonkers.ie, warns that customers using these prepay options can't avail of the cheapest tariffs offered by other suppliers such as Airtricity, Bord Gais and Electric Ireland.
These typically offer discounts off the standard Electric Ireland rates if you sign up for electronic billing, payment by direct debit or dual fuel with gas. "The total difference could add up to as much as €260 a year," he said.
While people opted for prepaid electricity because it stopped them being landed with sudden big bills and encouraged lower usage, higher charges meant they would still probably pay more in the end.
Electric Ireland also has 36,300 customers on prepaid electricity tariffs. However, this option is not available to all households as it is only offered to customers in arrears as a way of maintaining their electricity supply while also using a portion of each credit to help clear their debt.