Discounts to spark gas market price war
THE prospect of an energy price war looms after it emerged a new competitor to the market will undercut Bord Gais by up to 10pc for domestic gas supplies.
Airtricity will today announce it will take on the state gas supplier, in a move that could save families up to €200 a year on gas and electricity costs. Airtricity will also create 150 jobs through its move into gas supply.
Private company Flogas already offers consumers a discount of 9pc if they switch to it from Bord Gais. Flogas has guaranteed to undercut the state company's gas prices by 9pc until October at least.
The further opening up of the residential gas market comes as the Esb has been facing intensive competition on electricity pricing from Airtricity and Bord Gais.
Airtricity has already captured 200,000 electricity customers. And it is to announce today that it will offer these customers a discount of 10pc on gas if they also switch to it for gas supplies.
Airtricity, owned by Scottish and Southern Energy, has supplied electricity to households for more than a year, giving discounts of up to 13pc on the ESB's electricity tariff.
The new move opens the way for double discounts for customers who agree to buy all their household energy from Airtricity. The Scottish-owned company would not comment yesterday, but it is understood it plans a major shake-up of the gas and electricity markets.
The move will mean savings of almost €60 a year for a typical household that has an annual gas bill of just less than €700.
On top of this, Airtricity's electricity should be €140 cheaper than the ESB's for a family spending €1,200 a year.
Bord Gais is not allowed to offer a discount on its gas prices as it is the dominant supplier. But it can undercut the ESB on electricity, and has already captured 350,000 customers from the state electricity company.
Bord Gais will undercut the ESB by up to 14pc on the unit price of electricity if a customer signs up for gas and electricity and also pays by direct debit. This discount is for a year, and falls to 5pc thereafter.
Airtricity's dual-fuel discount is the latest round in a price war sparked off by regulators keen to break the dominance of the ESB and Bord Gais. They are prevented from competing on price with new entrants, resulting in a customer exodus from the ESB in particular.
The ESB has lost almost a quarter of its customers, but regulators say this decrease must reach 40pc before it will be given the freedom to set its own prices -- a target likely to be met early next year.
Dermott Jewell, chief executive of the Consumers' Association of Ireland, welcomed the entry of a new competitor to the market. He urged consumers not to let inertia get the better of them and to make sure they saved 10pc on their bills by switching to a cheaper supplier.