December 19, 2008
Following on from my original post a couple of weeks ago, 5 Reasons Not to Give Vouchers this Christmas, there was a fair bit of media coverage in recent weeks on the whole issue of giving vouchers.
Pat Kenny covered vouchers for Christmas a couple of times on his morning radio show. It might become available here sometime soon to listen to.
Conor Pope also covered vouchers recently in his PriceWatch column in The Irish Times. James Doorley, Chairman of the Consumers Association of Ireland has also covered vouchers on his blog.
Having read all that coverage on giving vouchers for Christmas, maybe you’ll think twice about it - the more you read about vouchers, the more it’s not all cut and dried.
It doesn’t take long to have a think about what your nearest and dearest would love to receive for Christmas. You know what they say, “it’s the thought that counts”.
December 13, 2008
Just a few short comments for the weekend.
- ValueIreland.com Housekeeping - We think we’ve been having problems with our e-mail recently, but it’s only come to light on Wednesday. We do reply to all e-mails and phone messages received within 48hours, and have resent some that we thought didn’t get through. So, if you’ve been expecting an e-mail response from us, but haven’t received one, please get back to us.
- Health Insurance Price Rises - This should have gone in last week, but better late than never. The VHI are increasing their price rises by 23% in 2009, and Quinn Healthcare are raising theirs by 16%. Hibernian Healthcare on the other hand will give you a 10% discount and hold that price for 2009 if you change to them on either December 21st or 30th. And don’t forget, despite what your current insurer might lead you to believe, there’s no problem in moving from one company to another - you will not lose cover. Hibernian actually make it easy for you with template cancellation letters for either Quinn or the VHI.
- Explain Yourselves - Seems that that’s the only solution that this government, and the Department of Enterprise, Trade and Employment in their feigned attempts to address the higher prices in Ireland compared to elsewhere. The grocery multiples have already been called in (without much success as we’ve seen), and now it looks like the mouthful that is the Joint Oireachtas Committee on Communications, Energy and Natural Resources is getting in on the act by calling in the ESB to find out why we have the highest electricity costs in Europe. Not sure much will come from this - if the regulator with the power (pardon the pun) only insists on a 1% reduction in tariffs, a Dail committee isn’t going to get too far.
- Avoid Transport Price Rises - In the past week it has been announced that Dublin Bus and Irish Rail will be increasing their fares early in 2009 because of a fall in passenger numbers. This post from early in 2008 gives you a suggestion on how you might avoid these price rises, at least for a while. Unsurprisingly, there’s no details on the respective websites that I can find, so if we don’t know which tickets are going up by what amount, we’re not going to know which tickets to buy now to beat the rise.
- Fine Gael Launching a thousand rip offs - We had Leo Varadkar give us his Top Tips for Irish Consumers yesterday, and on Tuesday last he was quoted in the Dail as saying he and Fine Gael will be relauching their “Rip Off Ireland” campaign “in the coming weeks”. This will be the second relauch within 12 months. I see that they have redesigned their RipOff.ie website in the past few months (though I’m not sure where the www.bublin.eu links are coming from on some of the pages). They would do well reviewing some of the site contents, particularly on their Links page - references to the ODCA and “interim NCA” are out of date, as are links to the dearly departed ShoppingBill.com and RipOffIreland.org.
Have a great weekend!
December 2, 2008
There’s been some coverage recently of the banking unions calls for the Irish banks not to “fall into the hands” of private equity investors. Obviously, with headlines like “Unions fears 3500 job losses” you can see why they might be worried.
While private equity funds have a “slash and burn” reputation - coming in and reducing costs anywhere possible while at the same time extracting as much money as they can for themselves - its unlikely that the strength of the unions within Irish banking would allow that to happen - in the short term anyway. It hasn’t happened in Eircom - from a job losses as a money saving tactic perspective at least.
There’s the good and the bad of private equity deals - but I don’t know enough to comment fully. The KKR takeover of RJR Nabisco in 1988, one of the most famous, is the subject of “Barbarians at the Gate” which is worth a read. A positive example of a private equity deal was the £25m takeover of London City Airport by Dermot Desmond in 1995 and its subsequent sale for £1.65bn in 2006.
How and ever, the perception is mostly negative though. Thanks to Michael Wade at Execupundit.com, check out this Business Week article “How Private Equity Strangled Mervyns“. Some key quotes from the article:
Cerberus, Sun Capital, and Lubert-Adler stripped the 59-year-old retailer of its assets and threw 30,000 people out of work .
Its 149 remaining stores are being liquidated. More than 18,000 people have been thrown out of work—without severance and, in many cases, weeks of vacation pay—amid the toughest job market in a generation.
Then they stripped it of real estate assets, nearly doubled its rent, and saddled it with $800 million in debt while sucking out more than $400 million in cash for themselves, according to the company. The moves left Mervyns so weak it couldn’t survive.
You can see why people might be worried. It will be interesting to see what sort of deals the Minister for Finance, Brian Lenihan can come up with. Will competition concerns be thrown out the window in order to save the banks and keep them from the hands of the private equity companies?
And will the same competition considerations be heaved out the same window to allow Ryanair take over Aer Lingus? But more about that later.
November 22, 2008
We’re suffering the highest electricity prices in Europe according to this article last week in the Irish Times for one particular reason:
IRELAND HAS the highest electricity prices in Europe for many businesses and domestic consumers, largely due to a dependence on electricity generated from fossil fuels, according to a new report.
And not only that, prices are increasing faster in Ireland than anywhere else in Europe:
Electricity costs the Irish domestic consumer 20 per cent more than the EU average, according to the report by Sustainable Energy Ireland (SEI), and some industrial customers are paying up to 52 per cent above the EU average.
Can I propose an alternative reason?
We have no competition for the ESB in the electricity market, and hence we’re being gouged on price because they can charge what they like, and are ably assisted by the useless Commission for Energy Regulation.
Have a look here to see the state of electricity competition in the Irish domestic market - with little or no change since 2005.
November 4, 2008
At the risk of incurring the wrath of one or two taxi drivers as I did the last time I wrote about taxi drivers in Dublin, can I ask a question following much of the recent coverage where we’re being told that deregulation has led to too many taxis in Dublin.
Am I the only one who’s wondering at the attitude of taxi drivers to this increase in competition in their business - or livelihoods as it’s more emotionally put?
Am I the only one who finds it a little sickening that taxi drivers are calling for regulation to be increased in their business to protect their livelihoods? Did I miss something where taxi drivers became civil and public servants and became entitled to jobs for life?
If there’s too many people involved in your line of business, then do something else. If you’re livelihood is being threatened because of too much competition, then do something different.
In pretty much everyone elses line of work, if there’s too many people doing a particular job that they’re qualified for, they have to find something different to do.
I worked in London in the Financial Services sector in the early part of this decade where business was declining following September 11th and therefore there was a focus on cost cutting that meant that my emplyoer at the time could hire 3-4 Indians for less than the cost of my salary. Dell employees in Limerick and Cherrywood have a similar predicament facing them in the next few months as well with cheaper labour threatening their jobs too.
It’s a fact of life that challenges will come along threatening your livelihood. Like everyone else, if taxi drivers don’t like the look of their future, they should look at their options and change, adapt, or settle for the way things are. Expecting extra legislation or regulation to maintain a closed shop is unrealistic, and should be resisted as it definitely isn’t good for consumers.
October 25, 2006
Today, the Competition Authority have announced that they are to investigate Ireland’s soaring electricity and gas prices. Specifically with regards to electricity prices, ESB prices are set to go up in January 2007 by 20%.
Here’s a tip for the Competition Authority. According to Value Ireland research, there is no competition for Irish consumers in the electricity market. You can buy from the ESB, and that’s it. Read the research article here.
Irish domestic consumers now pay 51% more for their electricity than the EU average. From January, Irish consumers will pay about 17.5% per cent more for electricity than their British counterparts. Ireland could have the third highest electricity prices in the EU by January with this most recent price increase.
We’re told that this is because of increasing costs of the raw material used to create electricity - oil and gas. Yet we’ve seen the wholesale prices of these materials fall recently. And if that was really the case, why have we seen electricity prices increasing about four times as fast in Ireland as price rises in the 15 countries of the pre May 2004 EU, according to figures published by Eurostat earlier this year.
But wait a minute. We’re told in a Deloitte report that Irish consumers are forking out an extra €100m on their electricity bills due to poor management at the ESB. The debacle at the Rhodes powerstation is a great example of this poor management. We’ve also been told in the press that wages for some individuals working at the ESB Poolbeg generating station in Dublin running to €140,000 including overtime!
These huge costs within the ESB are on top of the €77m dividend that the ESB paid to the Government in 2005, which brought dividend payments from the ESB over the previous three years to €175m.
So we’re paying higher costs because of the inefficiency of the ESB. Yet the ESB expected in 2005 to make a profit of around €300m.
The numbers here are staggering. Is there nothing that can be done to address the numerous issues here in order for us to have lower electricity costs?
The Government will claim that there’s little they can do in the short term. But there is! The Government currently charges 13.5% VAT on electricity compared to 6% in the UK. This provides a further €360m annually to the Government finances. Even reducing this VAT rate to the same as the UK would save Irish consumers nearly €100 per year.
Finally, there is a tiny flicker of light at the end of the tunnel, as expensive as that may cost us. It is expected that the Public Service Obligation (PSO) will be removed from all electricity bills in 2007. This saving is a result of the steadily improving competitive position of wind power, which has resulted in a reduction in the annual PSO levy imposed on domestic consumers. This levy will be set at zero in 2007 and will result in annual domestic electricity bills falling by whopping €11.
