Monday 23 January 2017

Your Money: Switched on

You are not alone if you are considering a change of electricity supplier. More than one in 10 energy customers are looking to switch this year in search of a better deal, writes John Cradden

Published 16/03/2010 | 05:00

Shauna O'Sullivan, Sarah Condon, Rachel O'Sullivan and Aoife Condon pictured at Tournafulla Wind Farm Family Fun Day
Shauna O'Sullivan, Sarah Condon, Rachel O'Sullivan and Aoife Condon pictured at Tournafulla Wind Farm Family Fun Day

IT goes to show what a little bit of competition can do. Since February 2009, when Bord Gais Energy (BGE) and Airtricity launched their switching campaigns aimed at winning new household electricity customers away from ESB, nearly 500,000 customers have made the switch.

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This equates to about 25pc of the domestic electricity customer base.

The incentives to switch were (and are still) strong. BGE promised to undercut ESB's prices by between 10pc and 14pc for the first year for customers who switch to them, which would fall to 5pc for years two and three.

Airtricity offers a similar deal: a discount of up to 13pc on ESB's regulated unit rates (which it says is the equivalent of five weeks free home electricity per year), dropping to 5pc for as long as ESB prices are regulated.

BGE admits it was surprised at the numbers who did make the switch. The company said its target for the first year was 60,000, but over 300,000 have made the switch to date.

Airtricity claims it has won 175,000 customers to date, and hopes to have 500,000 by 2013.

According to a recent survey by the National Consumer Agency, some 12pc of consumers intend to switch their electricity supply service provider in 2010.

The survey also showed that those in the over-45 age category are more likely to switch than average, with 17pc planning to switch this year.

A spokeswoman for the Energy Regulator said it was "very pleased" at the level of switching activity to date.

"If customer switching continues at its current rate it should be possible to end price regulation in the domestic sector in the not-too-distant future," she said.

At the moment, ESB cannot react to the new competition, as it must get approval for all price moves from the energy regulator.

But the regulator has already proposed a "roadmap" to where ESB Customer Supply's prices will no longer be regulated and controlled.

This means ESB should be able to set its own prices and compete directly on the same basis as the independent suppliers in all market segments.

The ESB is certainly hoping for a decision on deregulation soon as it believes the domestic market is competitive and says the pace of customer switching is "unprecedented compared to other competitive markets".

Comparing prices

How much you pay for your electricity depends on how you pay, what tariff you choose and whether you live in an urban or a rural area.

Paying by direct debit can be cheaper than other methods such as cheque, as both BGE and Airtricity offer a discount if you agree to a direct debit mandate.

You can pick a standard day tariff or a 'nightsaver' tariff. Basically, night tariffs involve higher cost by day and a higher standing order charge.

It is generally only worth considering if you make high usage of electricity at night. Households designated as being located in urban areas pay a higher rate than those in rural areas.

If you are a heavy user of electricity during the winter but less so at other times of the year, Airtricity offers a "budget plan" that allows you to spread the cost of your bills more evenly over 12 months.

Compare like with like

If you are thinking about switching suppliers, you should try to make realistic price comparisons by using your actual data from recent bills.

Make sure you are comparing like with like to see if you would be getting better value, as some tariffs may apply to different usage rates.

The other factor that may influence your choice of supplier is how 'green' they are.

According to figures from the energy regulator, 79pc of Airtricity's electricity is from renewable sources, while only 16pc of Bord Gais's electricity and 9pc of ESB's comes from such sources. The gas market looks set to become the next hotbed of switching activity now that Flogas has entered into competition against Bord Gais, while Airtricity is planning to enter the market later this year too.

The gas market was fully opened to competition in July 2007, but it's only now that alternative suppliers have begun to offer a domestic gas supply service.

Like the electricity market, suppliers had initially concentrated on the business sector following deregulation in February 2005 before eventually turning attention to the domestic market.

Flogas, which launched its switching campaign last October, says it will offer 7pc lower prices than Bord Gais for gas, with a further saving of 2pc if you commit to paying by direct debit. There are no costs for changing over, and you can switch again if you want after only 20 days.

Like the electricity market, switching gas suppliers is easy and quick and requires no changes to meters or pipework. But even if you decide not to switch, the good news is gas prices have been falling over the past year. Last January, the CER approved an 8pc cut in Bord Gais's gas tariff that took effect last month, which should result in €53 off the average bill.

Check out the CER's consumer information website, www.energycustomers.ie, for more information.

Irish Independent

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