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YOUR FIVE-MINUTE GUIDE TO... ENERGY PRICE HIKES

MONEY MADE EASY - BY NIALL BRADY

 
YOUR FIVE-MINUTE GUIDE TO...
ENERGY PRICE HIKES
 
The honeymoon of discounted energy tariffs ended last week when Bord Gais announced that it would increase electricity prices by 12% from August 1 and ask the regulators for permission to raise prices by 20%-30% from October.
 
Simon Moynihan of Bonkers.ie, a price comparison website, estimates electricity bills will increase by €120 a year and gas bills by €180. We will tell you how to limit the impact.
 
WHY THE INCREASE NOW?
 
Bord Gais says wholesale electricity prices have increased 20% since October 2009 and that the higher costs must be passed on to consumers.. It currently bases its prices on ESB's standard tariff, giving discounts of up to 14% on its rival's unit price of 16c for electricity including VAT and a standing charge of 28.6c per day in urban areas.
 
Bord Gais will introduce its own standard tariff for electricity on August 1, with a higher unit price of 17.92c and a standing charge of 32.03c a day. New customers will get introductory discounts of up to 14% off this higher tariff if they pay by direct debit and also buy gas from Bord Gais.
 
WHAT ABOUT EXISTING CUSTOMERS?
 
Thousands of households who moved to Bord Gais in 2009 as part of its "big switch" campaign are in for a shock because their electricity prices will rise by far more than 12%. Their two-year introducttory discounts expire around now. If they stick with Bord Gais they will move from price plans that under cut the ESB by 10% to the company's new standard tariff, which is higher than ESB's.
 
WHAT SHOULD THEY DO?
 
Switch back to ESB. It's cheapest for electricity with 14% off its standard tariff if you pay by direct debit and receive your bills online.
 
Airtricity also gives 14% off ESB's standard unit prices, but it has the highest standing charge in the industry - 32.35c a day.
 
WHAT ABOUT GAS?
 
All gas suppliers peg their prices to Bord Gais, so their prices will move in line with whatever increase is sanctioned by regulators in October.
 
Flogas's Option B currently gives a 15% discount on Bord Gais's prices but only until October.
 
Airtricity's Dual Saver bundle also gives 15% off gas and 5% off electricity, although you can switch the combination if you use more electricity than gas. It locks you into a 12-month contract with a €70 penalty for leaving early.
 
ESB's Supersaver tariff gives 6% off gas and a 17% discount on electricity.
 
SHOULD I SWITCH?
 
Yes if you are with Bord Gais because it will be the dearest for both gas and electricity. The market will be in flux, however, until the other energy suppliers react. "Switching is easy, it only takes a few days and most deals do not require annual contracts or charge penalties for leaving early," said Moynihan. "If your new supplier increases prices, there's nothing to stop you from moving again. You could wait till the dust settles, but you'll probably pay more than you should for a little while by doing it this way."
 
TOP TIP
 
To get the best deals you must pay by direct debit. If you would rather not makes sure you pay on time. At least one-quarter of ESB customers are unable to qualify for its electricity discounts, for example, because they are slow payers, often waiting until a new bill arrives before paying the previous one.
 
Niall Brady

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