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Gas prices to drop as ESB joins market

THE ESB is poised to enter the gas market for domestic customers in a move that is likely to put downward pressure on prices.

The move, which is expected in March, will bring to four the number of companies competing to supply households with gas.

Scottish-owned Airtricity and Irish-owned Flogas are already undercutting Bord Gais for the supply of gas to homes.

Bord Gais admitted yesterday that it lost 80,000 customers last year as savvy consumers have become keen utility switchers.

ESB, which is being rebranded as Electric Ireland, will now join the other three companies in competing for residential gas customers.

The state electricity company will also be able to offer discounts on electricity before the summer. Up to now it has been banned by the energy regulator from competing on electricity prices because of its dominance in the residential market.

It has been told by the regulator it cannot discount electricity prices until its share of the domestic electricity market has fallen to 60pc. A spokesman for the ESB said it was now close to 60pc of the residential market for electricity and would launch a competitive electricity offering and start to supply gas to domestic users from the second quarter of this year.

The ESB is one of the largest buyers of gas in the State as many of its power plants are fuelled by gas.

The company, which is spending between €6m and €8m on rebranding as Electric Ireland, will also mimic other players by offering a dual gas and electricity offering.

Airtricity offers discounts of 20pc on the gas tariff for customers who sign up for electricity. Consumers also get a 6pc discount on the ESB electricity tariff, but they have to sign a contract for a year.

Flogas, which is owned by Irish Stock Exchange listed DCC, offers discounts of 15pc on the Bord Gais tariff for gas. It is also expected to enter the electricity market soon.

The market for electricity among households is also due to become more competitive once the ESB is allowed to offer discounts to entice customers back who have switched to Airtricity or Bord Gais.

Some 40pc of residential electricity users have switched providers in the past two years, making Irish consumers among the most enthusiastic utility switchers in Europe.

Simon Moynihan, an analyst with comparison website Bonkers.ie, said the ESB was likely to offer big discounts to win back electricity customers it has lost and to get a foothold in the residential gas market. But he warned the state company was unlikely to offer discounts to existing ESB customers.

Mr Moynihan also warned that utility offerings from different companies were set to become harder to compare as companies will follow the lead of their British counterparts in making it difficult to compare tariffs.

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