Don’t keep getting squeezed by the endless energy price hikes – instead, take some simple steps to reduce your heating bills over the winter
Personal Finance Correspondent
A series of recent price hikes by energy firms has left consumers reaching for their winter woollies and turning down the heating. However, making the best use of the various tariffs on offer can help to offste some of the pain.
Deregulation and a number of new entrants have brought greater competition to the energy market in the last few years.
Since 2011, Electric Ireland – ESB’s supply business – no longer has to seek approval from the energy regulator, the Commission for Energy Regulation (CER), for price changes.
The company now faces competition from a number of other suppliers in the electricity market, such as Bord Gais and Airtricity. Bord Gais faces competition in the gas market from Airtricity, Flogas and Electric Ireland, all of which can decide their own prices.
However, despite this additional competition, prices are still rising. The latest figures from the Central Statistics Office showed tha the cost of electricity had risen by 9.3 per cent in the last 12 months, while gas prices have jumped by 18.1 per cent in the same period.
Figures from Bord Gais indicated that a typical annual household gas bill is €892,62, and a typical annual electricity bill is €1,149.
That equates to about €74 and €96 a month respectively, which is a large chunk of the average family’s monthly income.
With continued volatility in the wholesale energy market, consumers should budget for more price hikes ahead. Energy prices here are also highly correlated with currency prices, as so much energy used here is bought in dollars or sterling. This means that any weakness in the euro increases the price of buying energy and has a knock-on effect for consumer prices here.
Against this backdrop of rising prices and more choice of plans and tariffs, consumers must assess a lot of information to make informed decisions on their energy bills.
Comparison website Bonkers.ie, the first energy price comparison service to receive CER accreditation, allows consumers to compare the array of energy tariffs on the market. According to Simon Moynihan of Bonkers.ie, traffic to the website has been at record highs in the last month, evidence of increased price sensitivity among consumers.
Moynihan said the comparison website had to adhere to a strict code of conduct to retain its approval from the energy regulator, so comparisons, data, and figures were carefully checked to ensure accuracy at all times.
Consumers can compare costs based on either national average energy usage or unique personal data. According to Moynihan, most people using the website input their own data to get the most accurate picture of how much the can save.
Earlier this year, I switched from one electricity provider to another and have been pleasantly surprised at the reduction in my bi-monthly bills. We also installed an energy monitor, with a built-in alarm that beeps when your energy usage goes over a pre-set level.
Now I’m much more aware of the energy I use, and getting better at remembering to unplug and switch off. For example, leaving our television plugged in with the UPC box on standby was actually costing us quite a bit. Our power shower was also a big energy-guzzler. So greater awareness and some simple tweaks have resulted in big savings with minimal effort.
According to Moynihan, energy customers should take a reading from their meter and ask their supplier for comparable figures from one year earlier, to estimate how much energy they use in a year. “Knowing the nimber of units you use is important,” he said. “It’s also very helpful to know your patterns of consumption.”
Based on figures from Bonkers.ie, Moynihan said that consumers on “legacy” plans stood to save the most, with annual savings of about €250 possible – or more than €20 a month in your household coffers. “It only takes about ten minutes to switch and make these savings,” he said.
But he warned that, even with a switch to a much cheaper plan, it would be hard to avoid price increases. “You’re never going to offset the rise in energy prices, even with the cheapest deal. People will still have bigger bills,” he said.
But as a general rule of thumb, don’t be afraid to switch to another provider to get a better deal. Typically utility firms will give a small discount if you opt for online billing by direct debit.
Some providers, such as Electric Ireland and Airtricity, offer bundled tariffs for consumers who have both their gas and electricity supplies with the same company, with good discounts to be hadin this segment of the market. However, Bord Gais cannot provide a dual-fuel offer because of its regulated status in the gas market.
Figures from Airtricity indicated that customers who signed up for its one-year Dual Saver options fixed-term contract could save up to €180 annually. Electric Ireland’s spokeswoman said the firm offered the highest discounts on dual-fuel bundles, with discounts of up to 14 per cent.
There are other ways to save too. According to Bord Gais’s spokeswoman, the firm will offer a 10 per cent discount to customers in their first year, provided they pay by direct debit, receive their bills electronically and opt for the Level Pay facility to spread their bills evenly over the year. “We offer a 5 per cent discount after the first year if the customer continues to meet these criteria,” she said.
To avoid a heavy bill in the winter, you can spread your bills evenly throughout the year, regardless of whether the sun is shining or the snow is thick on the ground. This option gives you greater control over your budget, removing the potential for shocks in your bi-monthly bills. According to the figures from Bord Gais, about 72,000 of its customers have opted for this service.
Airtricity’s budget plan has also proved popular. “We currently offer a budget plan at no extra cost to around 25,000 dual-fuel and electricity customers that have been with the firm for 12 months or more,” Airtricity’s spokesman said. For now, Electric Ireland does not offer a level payment plan, but the spokeswoman said that it “constantly reviewed” its offering.
Energy companies are also looking at alternative ways to win new business. For example, consumers who switch to Bord Gais for electricity will receive 2,000 free Tesco Clubcard points, and will also earn Clubcard points on their bill.
One relatively new feature of the energy market is the 12 and 24-month contracts offering discounts to consumers who commit to a supplier for a specific period.
Airtricity’s spokesman said that its one and two-year fixed-term offers for dual-fuel or electricity only were its most popular price plans at present, with discounts of up to 17 per cent available.
Moynihan warned that consumers could face penalty charges if they tried to switch supplier within the contract period. For example, Electric Ireland’s spokeswoman said that an early exit fee of €50 applied to some of its price plans where customers wished to leave before the expiry of their contract. Airtricity’s spokesman said that customers had a ten-day cooling-off period during which they coul cancel their contract at no cost. After that, there is a €25 termination charge if a customer leaves in year one of a contract, or €50 in year two.