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Sundaybusinesspost

Your Money: Reduce the energy drain on your cash

The first step, in cutting your bill, is to figure out how much energy you use - Emma Kennedy

After a spate of price hikes, and with colder weather ahead, energy bills are likely to be among the expenses causing headaches for families in the coming months.

From next month, energy customers will face higher bills as recently-announced price hikes kick in. Energy prices have already jumped considerably in the past year, with figures from the Central Statistics Office (CSO) showing that the cost of electricity rose 5.8 per cent in the last 12 months. Gas prices jumped by 7.6 per cent.

Comparison website Bonkers.ie, the first energy price comparison service to receive accreditation from the Commission for Energy Regulation (Cer), has estimated that Irish households will need to come up with an additional €52.71 a year to pay their rising gas and electricity bills.

That's on top of the hundreds, or even thousands, of euro they already hand over to energy companies.

While consumers cannot escape rising prices, David Kerr, managing director of Bonkers, said a big difference remained between standard energy plans and the cheapest deals available.

Switching

Significant deregulation and increased competition in the gas and electricity markets means more choice for consumers. Electric Ireland, ESB's supply business, no longer has a monopoly in the electricity market, with Airtricity and Bord Gáis, and prepay alternatives like Pinergy and PrePayPower, also offering electricity. Bord Gáis faces competition in the gas market from Airtricity, Flogas and Electric Ireland.

Despite the range of options, very few consumers actually move to another provider. Karen O'Leary, chief executive of the National Consumer Agency (NCA) said that just 16 per cent of electricity and gas customers switched in the last year.

She said that many consumers still viewed switching as a hassle. "For example, 48 per cent of those who have not switched gas provider had never checked to see if a better deal was on offer. The corresponding figures for electricity was 45 per cent."

Even if you have switched in the past 12 months, don't assume that you are still getting the best deal. "Providers regularly change their offerings so it is worth checking at least once a year to see if you can get a better deal," O'Leary said.

Don't switch just for the sake of it, as sticking with your existing provider could be the best deal. "Staying with the same provider is fine, providing you make the decision on an informed basis after checking what else is on offer," O'Leary said.

If you do decide to switch, watch out for penalties that sometimes apply if you move provider during a 12-month contract. Some suppliers levy a charge on switchers to cover administration costs.

What's on offer

There is an array of energy tariffs on the market, with stand-alone gas and electricity tariffs and bundled "dual fuel" offers. To make comparing the offers easier, the energy regulator has given its stamp of approval to two comparison websites, Bonkers.ie and uSwitch.ie.

Based on someone with gas consumption in line with the national average, the cheapest gas tariff on the market is from Flogas at approximately €837 annually, compared with the dearest at €961 from Bord Gáis. That's a saving of €124 annually, or just over a tenner a month.

Typically, discounted rates are considerably cheaper than standard rates, but consumers will usually roll back onto standard rates when an offer period expires.

With Airtricity, the biggest discounts are on offer for customers who bundle gas and electricity, with discounts of up to 23 per cent on its standard rates for dual fuel customers.

About 90 per cent of Airtricity's customers are availing of a discount of at least 3 per cent off its standard rates. It gives a 3 per cent discount for paying by direct debit, and a 4 per cent discount for those who pay by direct debit and opt for e-billing.

Given that Bord Gáis's residential gas pricing is still regulated by the energy regulator, the company is unable to offer dual fuel deals. However, it has discounts of up to 10 per cent on standard rates for electricity customers who commit to certain payment options.

Electric Ireland's spokesman said that offers were continually changing, meaning that what represented best value also shifted. "It may be advantageous for customers, at different times, to choose individual offers or both fuels from one or more suppliers," he said. "It is important that customers check supplier standing charges, unit rates and duration of offers."

Currently, the company is offering discounts of up to 10 per cent off its standard rates, and as with other suppliers these discounts are tied to direct debit payments and online billing.

A spokeswoman for Flogas said that the company offered "a special introductory offer for new customers", with a range of other options to choose from after the 12 month discount period expires.

Often, the headline numbers you'll see from energy companies are the attractive rates that they offer new customers. But what will they do for existing customers?

Electric Ireland's spokesman said the company had discounted price plans available for "both existing and 'winback' customers". "These offers change from time to time based on a range of selection criteria and in response to other competitor offerings. Customers may be required to fulfil additional criteria, such as go on direct debit or move to online billing, to avail of current offers, as their own discounts expire."

Other companies say that existing companies can still avail of discounts for paying their bill in a certain way, and can also enjoy the benefits of a customer loyalty programme.

Prepayment options

Typically, prepaid electricity in Ireland was an option for customers struggling to cope with arrears. However, pay-as-you-go electricity is now proving popular, with customers on the hunt for more spending control.

Pay-as-you-go company Pinergy installs a keypad in a customer's home which displays information about electricity consumption. Customers buy credit and apply the top-up value using the keypad. There's an initial free credit of €5, an emergency fiver credit and a commitment that customers will not be cut off between 5pm and 9am from Monday to Friday or on weekends and bank holidays.

Pinergy's tariff is matched to Electric Ireland's standard tariff, and customers pay a daily standing charge too.

PrePayPower offers an alternative choice for pay-as-you-go electricity. According to figures from the company, it installed over ten thousand prepaid meters in homes across Ireland last year. It operates on a similar pricing model to Pinergy, committing to match Electric Ireland unit rates. As with its pay-as-you-go rival, meter installation is free.

Ways to cut your bills

The first step is to figure out how much energy you use. Take a reading from your meter and ask your energy supplier for comparable figures from one year earlier to work out your annual energy usage. This makes it easier to determine what tariff is right for you and your usage habits.

Also figure out when you use most of your energy. For example, moving to a night saver rate could be a way to cut your bill.

Figure out what guzzles energy, and then get used to unplugging equipment, turning things off and being more energy-efficient. An electricity monitor could help you to see just how much electricity your home is using, and how much it costs. A host of websites, such as Powerofone.ie, offer energy efficiency tips.

When it comes to paying your bill, utility firms will usually give you a discount if you opt to pay by direct debit or for online billing. It's also important to try to avoid estimated bills, as you could pay over the odds. Submit a meter reading yourself whenever you receive your bill, to ensure you pay only for what you use.

Budgeting options

Energy bills will generally be much higher in winter, but if you prefer a consistent cost, some energy providers will allow you to spread your bills evenly throughout the year. This option gives you greater control over your budget.

About 10 per cent of Airtricity customers are smoothing out their energy bills via the company's Budget Plan option. A Bord Gáis spokeswoman said nearly 100,000 of its customers currently availed of its Level Pay product, and roughly one in ten of Flogas's customers use its Budget Payplan direct debit option.

Electric Ireland does not currently have a bill-smoothing option, but is developing a product in this area at the moment.

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