This article was written in 2014 and may contain out of date information. Browse more recent articles.
Bord Gáis Energy is to be deregulated on July 1st it has been announced by the Commission for Energy Regulation today.
The deregulation of Bord Gáis Energy means that the company will be able set its own gas prices from July 1st. Until now, Bord Gáis Energy has been required to apply to the Commission for Energy Regulation to change gas prices. Bord Gáis Energy is already able to set its own electricity prices.
Ireland’s largest gas supplier and second largest energy suppler is the only price regulated supplier in Ireland. In order to achieve gas price deregulation, Bord Gáis Energy was required to meet criteria that included reducing its market share of domestic gas customers to below 55%.
In April, Bord Gáis Energy had a market share of 55.55%. It was determined by the CER that this would have fallen below the 55% threshold by July 1st.
Bord Gáis Energy could have deregulated when its market share fell below 60%. However, deregulating at 60% would have required Bord Gáis Energy to rebrand. Bord Gáis Energy’s choice to wait until 55% indicates that it wishes to maintain the Bord Gáis Energy brand despite its pending sale.
Bord Gáis Energy Sale
It was announced in March that Bord Gáis Energy would be sold for €1.1 bn to a consortium led by British energy giant Centrica. Centrica is the owner of British Gas, one of the largest energy suppliers in the UK. This deal is expected to close June 1st.
Commenting on today’s announcement, bonkers.ie Managing Director David Kerr said: “The deregulation of Bord Gáis Energy is great news for consumers. Ireland now has a fully deregulated energy market which will see increased competition with the potential for better prices for consumers. bonkers.ie strongly welcomes the decision announced today by the Commission for Energy Regulation.”
Deregulation will offer Bord Gáis Energy the opportunity to compete with Electric Ireland, SSE Airtricity and Energia in the dual fuel maket. Bord Gáis Energy has been unable to effectively compete in the dual fuel market because it could not discount its gas price.
Currently an average family can expect to pay €993 for their gas with Bord Gáis Energy. If Bord Gáis Energy is to compete with cheaper gas suppliers like Flogas and Energia, the company will need to introduce a discounted gas tariff that is at least €140 per year cheaper than their current standard gas rate.
Regulated gas prices have increased by 37% since 2011. In September 2011, and average household was spending €727 per year on gas. Now an average household can expect to pay €993. That's an increase €266 in less than three years.
In order to achieve deregulation, Bord Gáis Energy was required to meet the below critera.
- Threshold for deregulation is 60% market share based on customer numbers with rebranding of its retail business and without rebranding the threshold is 55%.
- At least 3 suppliers, of which two are non-Bord Gáis Energy suppliers. Each of these must have a market share in excess of 10%.
- Customer switching rates in excess of 10% per year.
Following a competition review analysis for April 2014, it was determined by the Commission for Energy Regulation that these criteria had been met or would be met by July 1st.