Energy prices, switching supplier and early exit fees - Shannonside
Due to the ongoing energy crisis, some households could be facing increases of €400-500 on energy bills alone this winter. However, it may be possible to mitigate these price hikes by switching energy suppliers.
CEO of bonkers.ie, David Kerr, appeared on Shannonside FM to discuss why prices are increasing, the value to be had by shopping around and energy contract cancellation fees.
Listen back to today’s interview, or take a look at the breakdown of the main points discussed by David below.
Why are prices going up?
This year we’ve had more price increases than ever before in the history of the regulation of pricing. In fact, some suppliers have increased their prices by four times and that’s never happened before. Some of these price increases may add around €800 compared to last year.
There are three main reasons for these price hikes.
- Burning of gas - we burn gas to generate electricity, which means that we’re exposed to the wholesale market price of gas. This year the wholesale price of gas has increased by over 200%.
- Power plants - two of the major gas-fired power plants are out of action at the moment due to maintenance. These are due to come back on stream over the winter months.
- Wind energy - we’ve had the least windy summer since 1961. In July less than 7% of our electricity was generated through wind, which is very low and unusual.
Take a look at this blog for a more detailed explanation about why energy prices are on the rise.
Can consumers still save by shopping around?
Yes, this is more important than ever. There are 14 energy suppliers in the market in Ireland at the moment and each company wants you as their customer. They’re willing to give you a large discount off their standard rates if you’re willing to sign up for them.
These contracts tend to be 12 months long. Once the year is up the discount goes away and you’re able to move to another supplier.
What’s happening is that customers who are switching are getting a great discount, and customers that are staying are paying for the discounts.
Last year’s worst prices are this year’s best prices. Everyone’s prices are going up, yet figures show that only 1 in 7 households will switch supplier and avail of a discount. It’s worthwhile doing.
How easy is it to switch?
You only need a few things on hand to make the switch:
- For electricity, you’ll need your MPRN (meter point reference number) and for gas, you’ll need your GPRN (gas point reference number). These can be found on a recent bill.
- You’ll need a recent meter reading, unless you have a smart meter. It’s the meter reading that you switch to the new supplier with. You don’t switch at a point in time, you switch at a point of consumption.
- A good estimate of how much energy you use.
- Some personal details, such as your name, address and bank details.
Take a look at our guide on what you need to switch suppliers for further information.
Each energy company has a number of different tariffs that you can choose from. You can choose what way you’d like to pay, whether that’s in person at the post office or online. Usually the cheapest deals are those that have online billing and are paid by direct debit.
What if you’re still in contract?
There’s usually an early exit fee if you decide to leave your existing supplier while you’re still in contract.
The first thing you could do is ring your existing supplier and ask them if you’re still in contract and if there will be an exit fee for leaving. You should also ask how much electricity you used in the last 12 months. The supplier will give you a number in kilowatt-hours. On average in Ireland, we use 4,200 kilowatt-hours of electricity annually.
Once you have those two bits of information, you can calculate very accurately how much you’ll save by moving to the best deal in the market.
If your exit fee is €50, which it usually is, you can decide if you’re willing to pay that amount to avail of a new, cheaper deal with another supplier.
How much can people save by switching?
If a customer has both gas and electricity, they can save €622 today on the average household bill.
The average is calculated by the energy regulator. It would reflect the equivalent of a three-bedroom semi-detached house that uses around 4,200 units of electricity and 1,100 units of gas per year. However, every household is different.
The increases are unprecedented. Everyone will be paying for electricity and gas this year, but you’ll be paying significantly more if you don’t switch.
Are there more energy price increases on the way?
Yes, there are. Some companies have increased their prices three or four times.
Electric Ireland was the most recent to announce a price increase last Friday, which will affect 1.1 million customers in the country. That was the supplier’s second price increase. We do expect more companies to make further announcements.
These announcements are theoretical at the moment because we’ve heard about them, but haven’t seen the impact on our bills just yet. The clocks haven’t gone back yet and not all of us have started turning on the heating just yet.
The energy bills at the end of October and the start of November will be when we really see the effect of the significant price increases.
Switch and save today
You can easily compare and switch to a cheaper supplier on bonkers.ie. It’s quick and easy to switch and can all be done in just five minutes online.
If you’re seeking advice when it comes to switching, have a look at our guide on 7 things to consider when switching energy supplier or check out the most common questions we get asked about the energy switching process.
If you’re still in contract and don’t want to pay an early exit fee to switch, consider adjusting your everyday habits around the home in order to save instead. Check out these 15 ways to use less electricity and save money to learn more.
Get in touch
If you have any questions about what was discussed by David in today’s interview or about switching energy supplier, let us know.