The ESB will be able to set its own prices as soon as it sheds another 300,000 customers. Starting next year, consumers could expect cheaper electricity from all suppliers.
In a statement released today, the Commission for Energy Regulation (CER) said that competition in the domestic energy market had developed strongly with 1 in 5 customers switching in 2009.
The CER said it would stop fixing the ESB's prices as soon as its share of the domestic market fell to 60%. The ESB currently still controls 77% of the market despite vibrant switching activity since deregulation. Michael Tutty, chairman of CER said that at current switching rates, the ESB should be in a position to compete by early next year.
Airtricity and Bord Gáis Energy have persuaded nearly half a million customers to switch by promising savings of up to 14% over the ESB's rates. The ESB has so far been unable to compete.
The ESB has been instructed to change its name before it is allowed to compete on price with Airtricity and Bord Gáis Energy. CER believes that the ESB name would give an unfair advantage in attracting customers. ESB Networks, which provides home connections and meter reading services, would remain unchanged.
The CER statement was clear to point out that just because ESB would be able to set prices, consumers should not immediately expect lower cost electricity. "While international fuel costs will remain the main influence on Irish electricity prices, effective competition has the potential to bring real benefits to all customers through improved choice and quality of tariff products on offer and through further downward pressure on prices".
Deregulation of the business energy market will take place this October with ESB able to set its own prices as competing independent suppliers have already captured 50% of that market.