New entrant to shake up energy market and force rivals to cut rates
CHARLIE WESTON PERSONAL FINANCE EDITOR
FAMILIES are in line to save up to €300 on electricity and gas as a new supplier gets ready to offer massive discounts.
The entry of Energia into the domestic energy market next week is set to spark an energy price war - with existing suppliers expected to match its low prices.
Electric Ireland - with one million electricity customers alone - is now set to respond by offering new discounted electricity and gas deals to consumers.
Energia - which is owned by Northern power company Veridien and has two generating stations in Dublin - is expected to undercut Electric Ireland's standard electricity tariff by as much as €150 a year.
And it is set to be at least €140 a year cheaper on gas than the standard offering from the largest gas player, Bord Gais.
This means that consumers who agree to take both gas and electricity from Energia could benefit from savings of €300 a year.
Householders will have to sign up for direct debits and agree to have their bills sent to them electronically.
Energia owns two €500m power plants in Dublin and already supplies businesses. But it aims to be the lowest-priced supplier in the market when it launches its deals on Thursday week.
Its move comes just weeks after Electric Ireland (formerly ESB) hiked its prices for electricity. Its rival Bord Gais has a price freeze in place until the start of next month, but may then also increase its prices.
In the past two years alone, the cost of heating and lighting a home with electricity and gas has shot up by €450 a year.
Calculations based on what Energia already charges a select number of householders in a pilot scheme show the new residential player will charge just over €1,000 a year for electricity, according to Simon Moynihan of the price-comparison site Bonkers.ie.
This will be up to €150 cheaper than the standard offering from Electric Ireland.
For gas, Energia is expected to price its offering at €839, a saving of €140 on the standard rates from Bord Gais, based on average national consumption.
It plans to undercut its rivals for those who sign up with it for electricity, gas or a bundle made up of both.
The savings will be much less for those already on a deal from their supplier, especially those who have switched provider to save money.
But recent research from the National Consumer Agency found that only around 16 out of 100 consumers had moved their electricity and gas accounts to a different company.
Mr Moynihan said the entry of Energia to the domestic market should see consumers prepared to switch making massive savings.
"Energia looks like it is going to enter the market with competitive prices, which could lead to substantial savings for energy customers," he said.
Pressure on household finances has mounted with a 35pc rise in gas prices since 2011 and a 21pc hike in electricity prices. The average price paid for electricity here is now close to €1,200 a year.
For gas, the average annual cost is close to €1,000.
A raft of recent price hikes saw the combined cost of electricity and gas breach the €2,000 mark for the first time.
The price charged by Electric Ireland went up by 1.7pc at the start of this month for its more than one million customers.
This, combined with a higher public service obligation (PSO) imposed by the energy regulator on all households, has seen bills rise by €35 a year.
Airtricity, Pinergy and Prepaypower.ie have also pushed up their prices.
Airtricity's rise took effect from November 1, adding €40 to the average electricity bill.
A spokeswoman for Bord Gais said no decision had been taken on whether or not it would hike electricity prices for its 300,000 domestic customers from next month.
At the end of last year, the State-owned company had promised to freeze its prices until February.
A spokesman for Energia said it had no comment on its pricing plans for the residential energy market, but confirmed that it was due to launch its offering to householders at the end of the month