Back in October, when suppliers were all increasing gas prices, Electric Ireland announced that they would freeze electricity prices until January 1st. Their price freeze included all charges, which meant that Electric Ireland would freeze unit rates, standing charges and even absorb the Public Service Obligation levy increase which the regulator required from the start of October.
The price freeze was a bold move and showed that Electric Ireland was prepared to take the gloves off when it came to competition.
Obviously when a company says they will freeze prices until a certain date, it nearly always means that prices are going to go up on that date too, and sure enough bonkers.ie has just received details of those price increases. They are scheduled for January 1st, and of course, we’ve analysed them and they are available to compare on bonkers.ie now.
Electric Ireland’s price increases are not brutal by any means, and are nothing compared to the bloodletting we’ve seen in previous years. Unit rates will go up by just two hundredths of a cent which will mean an increase of around €1.20 a year for the average household. Not much at all really.
However, Electric Ireland is putting the bulk of their price increase into the standing charge, which will go from 30.36 cent per day to 33.70 cent per day. With VAT added on, that’ll mean €13.85 extra per year. This is pretty interesting because it means that no matter who you are, or how much electricity you use, you’ll pay that €13.85 extra.
The price increases don’t stop there though. Or as they say, no good deed goes unpunished. Electric Ireland has absorbed the PSO levy increase for the last few months for all of their customers, but they’ll be applying it in the New Year. The PSO Levy has gone from €27.84 to €42.87 per year, and of course VAT gets added to that, so customers will pay an extra €17.06 per year there.
Bills up by €32 per year
So what does it all mean to you and me? Well, because these price increases are not really usage based, it means that Electric Ireland customers will have to pay around €32 per year extra regardless of the tariffs they are on or how much they use.
Applying the bulk of a price hike to the standing charge is an interesting departure from old fashioned unit rate price increases and there are probably a few reasons for this...
Until now Electric Ireland had the lowest electricity standing charge of the three big electricity suppliers. This increase brings them in line with Bord Gais Energy while still remaining substantially cheaper than Airtricity’s 40 cent per day standing charge.
Electricity and gas consumption are falling. Irish households are using substantially (around 20%) less energy than they were just seven years ago, so it makes good business sense to increase the fixed charges that everyone pays rather than the just the unit rates which are consumption based.
Suppliers use unit rates in their marketing messages, and almost never use standing charges. You’ll see this across all providers. Bord Gais Energy’s headline discount deal is simply called “10% Discount”, Electric Ireland’s also has a 10% electricity deal, and Airtricity markets their top deal as having 14% off. None of these marketing messages take into account standing charges which are different across all suppliers. And to complicate matters even more, all of these discounts are off different unit rates!
The net result here is that Electric Ireland’s 10% discount deal may be cheaper than Airtricty’s 14% deal for one customer while the opposite may be true for another. Confused yet?
Well, I think all of this highlights a little something that bonkers.ie does to help consumers get the best energy comparisons possible, and here it is.
When prices change, and the suppliers provide the details, we update them. Electric Ireland just gave us their new prices, and they are now available on bonkers.ie to compare.
There’s a bit more to it than that though. All our comparisons are for one year, so let’s say you are on Electric Ireland’s standard rate and you run a comparison on bonkers.ie. We will take into account the current prices you will pay until January 1st, then we’ll use the new Electric Ireland prices from January 1st onwards. We do this because over the comparison period, you would actually pay those two sets of prices. We also do it because when your supplier changes prices, you will usually see two sets of prices on your bill as well - some of your consumption billed at an old price and some at a new.
In this case, using the old rates and the new rates to run a comparison wouldn't make much difference because there's only 12 days left until January 1st when prices change, but there are plenty of cases where prices changing during a comparison period can make a substantial difference to your results.
This method all comes down to providing accurate energy comparisons for our customers, and it’s important because discounts expire and prices change all the time. It’s a really good way of doing things, and we’d love to take credit for it, but we can’t. This calculation method was prescribed by the Commission for Energy Regulation and we follow it because we believe it is in the best interest of our customers.