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Cents & sensibility: Power trips

WITH savings of up to 14pc there for the taking, it's no surprise that more than a quarter of electricity consumers have switched provider in the past year. The Bord Gais 'big switch' campaign is all over the radio and TV.

Meanwhile, Airtricity is pushing a green agenda alongside its promise of up to 13pc savings on home electricity bills.

Of the three electricity providers, only Airtricity and Bord Gais are free to charge whatever they want. In order to give these new providers a chance to build up market share, they are being allowed to undercut ESB for a limited period of time. Total deregulation will be introduced into business markets in October. In the domestic market, the Commission for Energy Regulation (CER) says that price regulation will be removed when the ESB's market share falls to 60pc. Right now, it's at 77pc. With switching activity growing steadily, the regulator anticipates total deregulation in what it calls "the not too distant future".

It should also be said that the main thing driving the price of power isn't competition, but fuel prices. Most of our electricity is generated from coal and gas piped in from the UK. We've no control over how these prices move, and in a fully deregulated environment, expect all fuel price rises to be reflected in domestic electricity bills in short order. But with increased competition comes more choice, and better quality offers.

The good news about switching is that it's not difficult. CER says that in a survey, 97pc of switchers found the process easy. You can switch online at thebigswitch.ie, which is the Bord Gais promotional site, or at Airtricity.com. It's a paper process, no one has to come and rip out ESB cables to put in Bord Gais ones.

ESB Networks are responsible for the maintenance of meters and the electricity network. You won't see any change in the electricity service you receive if you switch your supplier. Also, if you're getting the Free Electricity Allowance from the Department of Social and Family Affairs, you'll continue to get it if you move from the ESB. The only difference is it will come as a monetary allowance instead of a deduction on the bill.

All electricity bills have four different charge categories: the standing charge, the number of units you've used, the PSO levy and VAT. The PSO or public service obligation levy is currently set at zero, so you don't have to worry about that. The next thing to note is that Bord Gais and Airtricity are only competing on unit rates. Standing charges and, of course, VAT are the same across the board.

To compare the prices of the different suppliers, you first need to know your profile. There are four: urban 24-hour, which is profile one; urban nightsaver, which is profile two; rural 24-hour, which is profile three, and rural nightsaver, which is profile four. The urban/rural thing is straightforward, depending on where you live. The nightsaver is not as self-explanatory.

Consumers who opt for nightsaver electricity will have substantial power requirements during off-peak hours -- often they heat their homes using heat pumps and underfloor heating. If you're on nightsaver you get a second meter and while the rate you pay for night power is around half the price of your day rate, the day rate is a little higher than the 24-hour profile day rate. You also pay a slightly higher standing charge. If you're on a 24-hour tariff, you can also install a night storage-heater meter for a one-off charge of €206.57.

WHAT ABOUT UNITS?

A unit is a kilowatt hour. If you're on a 24-hour tariff with the ESB, you're paying 16c for each one. If you're on nightsaver, you're paying 17.09c during the day and 8.46c at night. Both Airtricity and Bord Gais take these prices as starting points and start applying discounts.

The minimum saving for consumers who switch to Bord Gais is 10pc, which gives those on 24-hour tariffs a unit rate of 14.4c. And for those on nightsaver, that's a day rate of 15.38c and a night rate of 7.61c. You get an additional 2pc discount if you pay by direct debit, and a further 2pc again if you're an existing customer with the company. According to their calculations, the average household can save between €85 and €125 a year by switching to Bord Gais Energy.

Airtricity offers a range of discounts depending on how you like to get billed and how you like to pay. If you want to pay by cheque and keep getting your traditional postal bill, you get a 5pc discount on the standard ESB rates set out above. Move to an email bill but keep paying by cheque, you get a 6pc discount. Pay by direct debit but hold on to your postal bill, you get a 12pc discount, and move to an online bill and pay by direct debit, you get a 13pc discount.

offers

The discounts offered by both Airtricity and Bord Gais are introductory offers and last for 12 months only. Airtricity says that their tariffs will track ESB tariffs and maintain a minimum discount of 5pc after the introductory offer has elapsed.

Bord Gais says their deal will last for either 12 months or until the ESB price is no longer regulated, whichever comes first. Their prices will then revert to their "standard energy tariff".

Note that because neither Bord Gais nor Airtricity require you to enter into a contract, if a better deal emerges from someone else, you can switch quickly and easily to that new company.

www.esb.ie; www.bordgais.ie; www.airtricity.com


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