Irish News of the World
February 22nd, 2009
Electricity Competition Arrives in Ireland
Like the 19A bus, we wait for 4 years for a competitor to arrive for the ESB in a deregulated electricity market, and then in a month we get two – Bord Gais Energy and Airtricity. But before we get carried away, there are 19 electricity suppliers in the UK so we’ve a long way to go.
This is still good news for the Irish consumer. But how much can we actually save, and is everything as good as it seems. And more importantly, are there any catches?
Bord Gais Energy this week announced a promise to new customers that they will be always at least 10% cheaper than the ESB for the first year you sign up to them. They then guarantee to be 5% cheaper than the ESB for year 2 and year 3 after that.
If you’re a gas customer of Bord Gais already, they’ll give you an extra 2% discount, and as in incentive to pay by direct debit, they’ll give you another 2% off.
For the average electricity customer who can pay up to €1000 per year on electricity that’s a saving of between €100 and €125 per year.
Airtricity arrived a couple of weeks ago to the household market, but things are a little more complicated as they have 6 different discount levels. Depending on how you pay, they will give you between a discount of between 3% (paying by cheque) and 10% (for the Level Payment Plan and eBill).
Airtricity don’t provide a discount guarantee like Bord Gais Energy, but they’ll “endeavour” to provide the same discounts no matter what the ESB does.
So moving to Airtricity will save the average electricity customer up to €90 per year.
But with Airtricity you do have the benefits of using electricity that’s significantly greener than its competitors. 79% of electricity from Airtricity is from renewable resources, compared to 16% from Bord Gais Energy and 9% from the ESB.
This all sounds too good to be true – so where’s the catch?
For a start, even with these reductions, we’re still paying too much for our electricity. Last November, Sustainable Energy Ireland reported that Irish consumers were paying 20% more for our electricity than our European neighbours. But it’s a start I suppose.
What about switching away from the ESB? We’re told that switching will be simple and that we won’t even notice. We just ring up, give a meter reading and our meter number from our bill and that the rest will happen in the background.
But many of us tried to change land line or broadband provider in the past where the change was supposed to be equally simple. Given reports already this week, the ESB will be losing customers by the thousand, so it remains to be seen how easily the ESB will give up their customers.
A frequent problem when switching phone or land line providers in the past has been consumers receiving two bills – one from their new company and one from their old one. Given that an electricity bill is hard to read in the first place, this has the potential to cause serious headaches if companies get it wrong.
A further potential problem, similar also to what happened when the telecoms market opened up, could be the sales tactics of the competing companies trying to win your new business, or to win you back after you switch.
This was the source of enormous problems for electricity customers in the UK following their electricity deregulation, particular for older customers. Unscrupulous sales people were found to use bullying tactics to try to get customers to switch providers, or to switch back to their old supplier after moving. In some cases it was found that sales people actually forged signatures on switching forms to boost their commissions.
So what should consumers do? Recently, we’ve had reports that Minister Eamon Ryan and Taoiseach Brian Cowen hoped to see the ESB reduce its prices in the next couple of months, possibly by up to 15%.
If you’re not keen on switching then you might still save yourself over €125 anyway by staying put. But that’s in the future. Moving today to Bord Gais Energy can save you that much immediately, and possibly a total of €250 if the ESB do drop their prices.
Check out TheBigSwith.ie or Airtricity.ie if you want to find out more, or ValueIreland.com for more research on electricity competition.