The cost of heating and lighting our homes has shot up by hundreds of euro in the past five years, new research shows. by Christian McCashin
The huge hikes have added to the mounting burden ordinary families face following the introduction of the Universal Social Charge, property tax and water charges.
Since 2010 the average electricity bill has risen by as much as €216 to €1,206 a year, while gas rose by €217 to €944.
However, market experts have told how astute families can save as much as €314 from their yearly bill, simply by shopping around.
But Simon Moynihan, of price comparison website bonkers.ie, warned that those who are not prepared to switch are ‘subsidising the savvy customer'. And the Consumers' Association of Ireland urged householders to search for better deals.
Chief Executive Dermott Jewell said: “Switching is a good t because there's too much inertia in the market. You should never automatically renew or stay with a provider."
The latest study shows that in 2010 householders were paying €990 a year for electricity, but that went up by almost a quarter - 22 per cent - so the same amount of electricity now costs €1,206. And gas prices have risen by almost a third in the same period. In 2010 households were paying €727 a year for gas, now the same amount costs €944, the figures show.
However, the latest indication from gas and electricity firms is prices have begun to drop. Six months ago, Bord Gáis Energy cut the unit price of gas by 3.5 per cent and the unit rate of electricity by 2.5 per cent. In doing this, they hoped to reduce the average household energy bill by more than €54.
Despite this 1.7 million of the 2 million electricity customers in the country have not looked around for cheaper prices when their annual bill came round. They are in fact bankrolling price cuts for the 340,000 who regularly switch. Only 100,000 out of the 500,000 gas customers turn to a new supplier.
The deals on offer mean people who regularly switch their gas and electricity supplier can save a tidy £314 each per year, Mr Moynihan said. Those with only an electricity supply can save €168 on the standard tariff by switching.
Mr Jewell said: "It always makes sense to look at what the opposition are offering, what are the terms of the contract - and if they are good, enjoy it. And if they are not, look around.
“If there's money to be saved avail of it. People who don't switch would be subsidising those who do switch: they stay at the highest possible rate. Maybe that’s not the way consumers look at it, but they need to. They're the ones who are potentially at the highest current rate."
Bonkers.ie conducted the research into energy prices, and yesterday Mr Moynihan said: “There are about 15 per cent of people who can't switch; people who are on involuntary prepayment meters, e.g. they haven't paid their bills and have a prepayment meter put into their home, so a portion of what you put into your meter goes towards paying off the arrears.
“But of all the customers in the country, only about 15 per cent switch year. The other 85 per cent do not. Many don't because they don't know they have reverted back onto expensive deals, they think it's too hard or they just don't want to.
“So basically 85 per cent of the population are paying more they need to. About 340.000 electricity customers do switch and 1.7 million don't. For gas 100,000 do, 500,000 do not."
“If money can be saved, avail of it’
He said: “Those who don't switch are subsidising those who do in much the same way that people who leave their momey sitting in current accounts are subsidising the interest paid to people who look for the better deals."
“Households have the potential to save a staggering €370 million this winter-that's C314 each, he added.”
Mr Moynihan said: “Household energy prices have shot up in the past five years, despite four new suppliers in the market.
“The increases were sometimes as much as 15 per cent. There were three years in a row when prices went up, caused by wholesale gas prices for the most part. But wholesale prices have fallen now also, so they should be coming down more than they have, and the reasons are we've increased the amount of renewable energy we're generating but the purchase price of it is subsidised.
"The other thing is wholesale gas prices have fallen substantially. The last report we received said they've gone down again in August and September, so we would expect electricity prices to start falling.
"These figures have taken the recent price cuts into account. But in fairness the difference in the wholesale price and the retail price hasn't changed. The savings they're making are being passed onto us."
The new study, based on the standard urban tariff for electricity and gas, put the annual average cost of electricity in October 2010 at £990, rising to €1,206 in October this year.
Gas went from €727 in October 2010 to €944 this month.
According to the study, these figures are based on national average consumption of 5,300 kWh of electricity and 13,800 kWh of gas per year, as determined by the Commission for Energy Regulation.
COMMENT – Time to get price wise
Energy deregulation, we were told, would mean better value for the consumer. Instead, a new survey by price comparison website bonkers.ie shows that we are paying over €200 a year more for both gas and electricity than we were just five years ago.
We have an energy regulator who is quick to approve price increases, yet slow to force companies to bring prices down when, as was the case last year, commodity prices fell dramatically. Prices are immediately reflected at the petrol and diesel pumps and it should happen with gas and electricity prices too.
By the same token though, we often have only ourselves to blame. Switching providers regularly can lead to savings of an average of €314 a year – so next time someone knocks on your door offering you cheaper bills, don’t see it as an inconvenience, but as an opportunity. If you fail to switch every year or two, you might as well take a bundle of €20 notes to the patio and throw them on the barbeque.
This article appeared on the front page of the Irish Daily Mail on 6 October 2015