Electricity customers braced for price hike

Proposed decision could push bills up - Emma Kennedy Money Editor

With long evenings and sunny days to enjoy, energy bills are probably far from the minds of most consumers. However, a proposed decision by the energy regulator might just have grabbed their attention.

The Commission for Energy Regulation (CER) has published a proposed decision on the public service obligation (PSO) levy, indicating that the levy looks set to increase by 55 per cent from October 1.

The move will push up bills for electricity customers, who have already been hit by rising prices.

According to the latest price data from the Central Statistics Office (CSO), electricity prices rose by 3.7 per cent in the 12 months to May, Meanwhile, the CSO revealed that gas prices rose by 2.7 per cent for the same period.

The energy regulator's decision on the PSO levy - a subsidy charged to all electricity customers in Ireland - is not yet finalised, with a consultation process on the matter open to responses until July 4 and a final decision set to be issued by August 1.

The energy regulator's proposal to push the PSO levy from its current level of €210.9 million to €327.7 million for the next levy period will mean household electricity bills will increase by more than €20 per year.

However, the CER document indicated that the "level of the PSO levy for the period is likely to change somewhat between this proposed PSO decision and the final decision".

"This is due to the potential change in a number of inputs, in particular the predicted wholesale market price which can change in line with changing fuel or carbon prices," the document explained.

In its explanatory note on its proposed decision to hike the levy, the energy regulator said that lower wholesale energy prices was the "biggest single driver" of the price hike.

The energy regulator's proposal to hike the levy drew some angry reactions.

TD Michael Moynihan, Fianna Fail's spokesman on energy, said the hike came at a time when "energy prices in Ireland are among the highest in Europe and are rising at a much faster rate than the EU average". "Irish consumers are already paying well over the odds for their gas and electricity and the increase in this levy will see costs rise further," he said.

According to Moynihan, high energy prices affect struggling households, but also play "a direct role in the country's competitiveness and our ability to create and maintain Jobs in Ireland".

His concerns were echoed by employer's body Ibec. Dr Neil Walker, its head of energy and environment policy, said the energy regulator's proposal could "further damage our international competitiveness".


"Energy users in other EU markets are likely to see similar reductions in wholesale costs, but without any corresponding increase in PSO," he said.

"Urgent measures are now needed to insulate Irish manufacturing firms from the worst effects of our uncompetitive energy costs." For Irish households, news of a massive hike in the levy on electricity bills might suggest a huge jump in energy bills. The reality will be relatively small, but still pushes the overall cost in the wrong direction.

Simon Moynihan, an energy expert with comparison website Bonkers, ie, said that if the proposed increase goes ahead, customers will see the levy go from €42.87 to €63.01 per year.

"That's an increase of €20.14. Vat is charged on this, so it'll mean every household may soon have to pay €71,52, regardless of how much electricity they use," he said.

Those who switched electricity provider reported average monthly savings of €19


For electricity customers, the PSO levy will be hard to avoid. However, in a bid to reduce the impact of the levy hike, consumers could switch to a cheaper provider. Significant deregulation and increased competition in the gas and electricity markets means more choice for consumers. However, despite the range of options, very few consumers actually move to another provider. Figures from the National Consumer Agency (NCA) indicate that just 16 per cent of electricity and gas customers switched in the last year.

According to the NCA, those who switched electricity reported average monthly savings of €19.

With a lot of money to be saved by a change of provider, why don't more consumers do it? According to the NCA data, the main reasons for not switching are a difficulty comparing the options on offer, the perceived hassle of the switching process and a belief that there's no difference between the offerings from the various providers in the market.

If you do decide to switch, watch out for penalties that sometimes apply if you move provider during a 12-month contract. Some suppliers levy a charge on switchers to cover administration costs.

Energy usage

The first step to cutting your energy bill is to figure out how much energy you use.

Take a reading from your meter and ask your energy supplier for comparable figures from a year earlier to work out your annual energy usage.

This makes it easier to determine what tariff is right for you and your usage habits.

Also figure out when you use most of your energy. For example, moving to a night saver rate could be a way to cut your bill.

Figure out what guzzles energy and then get used to unplugging equipment, turning things off and being more energy-efficient.

An electricity monitor could help you to see just how much electricity yourhome is using, and how much it costs. There is also a host of websites that offer energy efficiency tips.

Billing options

When it comes to paying your bill, utility firms will usually give you a discount if you opt to pay by direct debit or for online billing. It's also important to try to avoid estimated bills, as you could pay over the odds. Submit a meter reading yourself whenever you receive your bill, to ensure you pay only for what you use.

Bills will generally be much higher in winter, but some energy providers will allow you to spread your bills evenly throughout the year. This option gives you greater control over your budget.

Websites that help you to understand your energy bill

There's an array of energy tariffs on the market, with stand-alone gas and electricity tariffs and bundled dual fuel offers. To make comparing the offers easier, the energy regulator has given its stamp of approval to two comparison websites, Bonkers.ie and uSwltch.ie.

Both the comparison websites have to adhere to a strict code of conduct to retain the regulator's approval, so comparisons, data and figures are checked to ensure accuracy There are also a couple of state- backed websites that help consumers to get to grips with their energy bills.

For example, the energy regulator operates EnergyCustomers.ie. It gives information on understanding your energy bin, handling any problem with your connection to the electricity or natural gas network, and switching to an alternative supplier.

Powerofone.ie, a government-funded scheme, under the auspices of the Sustainable Energy Authority of Ireland (SEAI), provides information on energy efficiency and helps consumers to cut their energy costs. There are energy ops on everything from fridge-freezers to boilers, with lots of practical tips on how to change your habits, and as a result, cut your bills.


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