This article was written in 2014 and may contain out of date information. Browse more recent articles.
“The market is evolving!” declared our managing director when yet another limited-time-only, sign-up-now, get-a-rebate, new customer energy deal hit the marketplace.
He was talking about the latest deal from Electric Ireland which offers a €50 bill credit to new customers signing up online. It was just made available this week, and it’s one of a bunch of new offers that have popped up recently.
Here's another one. On Saturday, Energia landed a front page splash in the Indo after openly responding to the One Big Switch campaign. “Why make one big switch?” they said “when you can make a dual fuel switch with Energia!”
And with that, they upped the discounts on offer to new dual fuel customers switching on their site. Good discounts they are too. The new deal could save gas and electricity households €289 per year over standard rates, is only available for signup until April 17th, and for a few brief days it was the cheapest way to get your gas and electricity.
Why only available until April 17th? Well, that's when the One Big Switch campaign stops taking signups too.
Not to be left out, Airtricity extended their €30 bill credit offer until 31st May for new customers. It was due to expire at the end of March, but with all the activity around right now, you can see why they’ve decided to continue with it.
Which brings us neatly back to what seems to have started all this - One Big Switch.
One Big Switch
In a flurry of fantastic PR and marketing, the One Big Switch campaign has collected some 53,000 names so far, nailed a deal with Bord Gáis Energy and introduced a whole new concept to the Irish market.
The concept behind the One Big Switch campaign is pretty simple, but deadly effective. Get a whole lot of people to sign up, negotiate a good deal on their behalf, and then sell the customers to a willing provider.
Now in order to make a deal like this really work, you’ve got to offer people something that is at least as good, or better, than the best deal available in the open market. So that must certainly have added to the One Big Switch challenge.
Then in a move that surprised many people (including myself) Bord Gáis Energy agreed to take on the One Big Switch customers. And they came out with an interesting tariff to snag the deal.
They’d offer new customers the Bord Gáis Energy 10% discount offer, and if those customers stayed for a year, they’d get a bill credit of €80. It had the potential to be the cheapest electricity offer in the marketplace, and for a short period of time, it was.
That is, until Electric Ireland took a leaf out of the same playbook and offered new electricity customers (not dual fuel mind you) a €50 bill credit too. They are calling it a “€50 Online Switching Bonus,” and it’ll help save customers €204 per year over standard rates, while knocking the One Big Switch campaign off the top spot by just €6...
But doesn’t the One Big Switch campaign say you’ll save €215 over the course of a year? Shouldn't it therefore be remain cheaper than Electric Ireland even with the €50 bill credit? Well, when I did my sums, it didn't work out that way.
On the One Big Switch website they do say “€215 estimated 1st-year saving for a typical 3-bedroom household on the standard rates†”. They have also said they’ll save you €215 throughout their campaign.
Of course, there’s always small print, and in this case the little dagger at the end of that statement says that they are talking about a 3-bedroom house that uses 5,300 kWh. Which is totally normal, it’s the national average electricity consumption and it’s what everyone uses when calculating savings.
The small print goes on to say “The savings figure is the estimated savings figures if such a household switched from the standard tariff to this special offer and includes the €80 cashback.”
And this is where it gets peculiar…
What standard tariff are they talking about? In this business most people benchmark against the Electric Ireland Standard rate. Swap away from Electric Ireland to the One Big Switch deal and you’ll get a saving of €198… so that can't be it.
Still confused, I went back onto the One Big Switch website and asked what they are discounting against. An online customer service agent said that the savings message was in fact based on the Bord Gáis standard rate and a consumption of 5,300 kWh per year. Again, fine, but as we are bonkers.ie, we decided to work the sums ourselves.
Bord Gáis's standard rate is called Residential and it’ll cost €1,193 per year for an average customer. Their 10% discount rate will cost the same customer €1,094. That’s a difference of €99. Throw in the €80 bill credit and you’ve got an annual saving of €179 over Bord Gáis standard rates… I checked and I rechecked the sums on this and still got the same savings messge. €179 not €215. So is the customer service rep wrong?
I know, I know. Everyone makes mistakes. But this is a substantial one. 53,000 people have signed up to the One Big Switch campaign based on a savings message of €215, and for the life of me I couldn’t see how they’d worked it out.
I tried every combination of standard electricity rates moving to the Bord Gáis 10% discount tariff, I added in the €80 bill credit and I simply could not get a savings message of €215… so what on earth was going on?
And then something dawned on me… what if the sums were initially done based swaping to a different supplier and not Bord Gáis at all?
When I first heard about the One Big Switch campaign I thought Energia was the most likely suppler to pick up their customers and I said so publicly. And since Electric Ireland is the benchmark supplier and has the most electricity customers, I thought maybe that was it. What if the €215 savings message was based on an Electric Ireland Standard customer moving to Energia?
And sure enough, if you move from Electric Ireland Standard to Energia SmartChoice, you’ll save €136. Add in the €80 bill credit and you have a saving of €216.
But there’s more. What if you’re a Bord Gáis Standard customer moving to Electric Ireland’s ValueSaver deal? You’ll save €135. Add in the €80 bill credit you have a saving message of €215!
The One Big Switch deal is a very good offer and will save people money... but could the One Big Switch campaign really be using a €215 savings message that is based on switching to Energia or Electric Ireland? A savings message that's not based on switching to Bord Gáis at all?
There's probably 53,000 people who’d like to find out.
Update 2nd April 2014
This blog seems to have caused a bit of a stir. Certainly it was noticed by the folks over at One Big Switch because I received a call from their Lead Campaigner David Liston today.
Mr Liston wanted to explain to me how they came to their €215 savings figure which is fair enough. I asked the question, and they were good enough to contact me with an answer.
He said that they took the Airtricity Standard rate and the Electric Ireland Standard rate, made an average and discounted from that figure.
He also sent me some copy to explain it:
“This is an estimated saving in the first year for a typical 3-bedroom household which uses 5,300 kWh per year. The savings are based on the Urban 24 Hour Tariff using an average of Airtricity and Electric Ireland’s standard rates for this tariff as of 20/03/14. Prices include VAT.”
It's an interesting explanation and it will get you a savings figure of €215, but looking a little closer, it means that they are discounting from a figure that is derived, or a tariff that doesn't exist. Why not just discount from a real standard tariff? It’s not what their website currently says either.
The One Big Switch website explains it this way:
"† This is an estimated saving in the first year for a typical 3-bedroom household who use 5,300 kWh per year. All usage is assumed on a 24 Hour Urban Tariff. The savings figure is the estimated savings figures if such a household switched from the standard tariff to this special offer and includes the €80 cashback. Source: Bord Gáis Energy."
No mention of Airtricity, Electric Ireland or any averages. Just “the standard tariff”. And what I don't understand is, why wouldn't you just declare how you're getting your numbers?