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Independent

Energy suppliers spark price war amid record costs

With Irish energy prices remaining at a record high, consumers are switching to new competitors and getting more bang for their buck – Charlie Weston

For the first time since 2010, Irish householders have been spared winter price increases from energy suppliers. In fact, Electric Ireland even introduced a small price cut this week which will benefit their 1.2 million electricity customers.

Price cuts are always welcome, but despite Electric Ireland's efforts, Irish energy prices remain at record highs.

An increase in the PSO (public service obligation) levy in October added to electricity bills and this has only just been offset by Electric Ireland's price cut.

The PSO levy helps fund the cost of generating electricity from peat and wind under various Government schemes.

For security of supply reasons, it is also used to top up the costs of some big gas-burning plants where all running costs are not recovered by the sale of the electricity generated.

The impact of the levy means that even without price increases this year, ordinary households still need to come up with €1,211 per year for electricity and €993 per year for gas," according to Simon Moynihan, director of price comparison site Bonkers.ie.

"It's a huge amount," he said.

Compared to 2011, electricity prices are up 22pc and gas prices are up 37pc, he said. And at a time when household budgets are under increasing pressure, finding almost €500 more for heat and light compared to just a few years ago is proving very difficult for many households.

Mr Moynihan outlines some ways to keep energy costs down.

Price War

It's not all bad news though. One thing that has happened in 2014 and has helped many energy customers is the launch of a new energy supplier.

Energia, which had been operating as a business supplier for many years in Ireland, launched a household gas and electricity business in the spring.

To kick off their new business, Energia decided that the best way to attract new customers was with strong prices - and they launched with home energy deals that beat the offers of most other suppliers.

Energia's prices, coupled with a big marketing campaign, attracted thousands of new customers, and by September they had become the most switched-to supplier in Ireland.

Of course, the State's four other energy suppliers didn't sit idly by.

They introduced a series of new cut-price deals and special offers to win new customers, and to entice their old customers to come back.

The ensuing "price war" resulted in the biggest discounts available to new customers since deregulation.

New customers

Energy pricing in Ireland favours new customers, and sadly long-term customers are rarely rewarded.

Sure, there are rewards points programs and deals on tickets and so on, but the best prices are always kept for new customers.

A new customer signing up for a discounted gas and electricity deal today could actually pay almost €300 per year less than someone who has remained with their current supplier for the long term.

The thing is though that these new customer discounts usually last for just one year.

So a year after signing up to a new supplier, most customers are back paying full price on expensive standard rates.

What it means is that in order to keep the cost of home energy as low as possible, savvy customers tend to check prices once a year.

And as there are always new deals and discounts available to attract new customers, those paying the least are the people that switch.

Switching

The ability to switch energy suppliers has been around since 2009, and over 40pc of energy customers have switched for better prices (often more than once) in that time.

It's a process that has been streamlined by the suppliers with the support of the regulator and it usually involves the completion of a short online form, or a phone call.

And all you need are meter readings, your MPRN (meter point reference number) and GPRN (gas point registration number), which are on your bills, and billing information.

Paying by direct debit is best as suppliers offer their biggest discounts to customers that pay that way.

Switching supplier does not mean that the electricity or the gas will be cut off, and technicians do not need to visit your home.

Changing supplier just means that your bill will come from a new company, and your gas and electricity should cost considerably less than they did before.

It takes around two weeks for a switch to complete and once it does, your old supplier will send you a closing statement which will be based on your meter readings. After that, your bills will begin to arrive from your new supplier.

Home benefits package

Many electricity and gas customers are in receipt of the Home Benefits Package.

This deal includes a monthly payment of €35 from the Department of Social Protection towards electricity or gas bills, and it is usually paid directly to Electric Ireland or Bord Gais Energy.

This benefit is very welcome by those that receive it, but it is also something that prevents people from looking for a better deal because customers worry that they might lose the benefit if they switch suppliers.

What is not well known is that if you are in receipt of the Electricity Allowance of the Natural Gas Allowance, your entitlement remains the same regardless of your supplier.

So if you switch to another company from Bord Gais or Electric Ireland, the benefit will just be paid directly to you instead of your supplier.

You'll need to contact the Department of Social Protection to arrange this, but the good news is that the saving you can make by switching could be like adding an extra €25 per month to the value of the allowance.

What you can do to get a better deal on your home energy? There are many ways to get a better prices on home energy, as all suppliers offer discounts to new customers which will save you money.

However, if you want a quick way to find the cheapest deal, an accredited energy price comparison and switching service like bonkers.ie is a good bet because that way you can see all the deals that are available from all suppliers and switch right there if you wish to.

If you'd rather not use the internet, or you don't want to change supplier, you can still get better prices.

Just call your supplier and tell them you'd like better prices. Some have "retention" deals which offer discounts off standard prices to keep you as a customer, but these are only available if you ask.

The most important thing though is to do something. If you don't you are guaranteed to be paying more than you need to for your home energy.

 

This article appeared in the Irish Independent “Your Money” supplement on Thursday 27th November.

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