WHILE IRISH consumers have had to confront higher taxes, new levies, lower wages, increased health insurance fees and a host of other charges over recent years, they have at least been spared the impact of rising home energy costs. Until now.
Bord Gáis Energy, the second-largest player in the Irish electricity market with a 21 per cent market share, and the most dominant force in the gas market with an 80 per cent share, is preparing to announce price increases of anywhere between 10 and 15 per cent for electricity and 20 and 30 per cent for gas in the weeks ahead. The move will see its customers worse off by about €300 a year.
The scale of the price hikes are shocking, but not surprising. For months it has been signalling such a move, and by now its arguments are well versed: it will blame the volatility on the international energy markets, which have seen the price of both oil and gas climb steadily.
Wholesale prices have increased by 39 per cent in the last 12 months and winter gas prices will be at least 30 per cent higher next year than last year. The company says it cannot absorb these increases, and so has to pass them on to consumers.
There is a huge degree of price matching in the sector, and Bord Gáis Energy, the ESB and Airtricity all charge identical fees for each unit of electricity and gas. It is hard to see that changing, and it seems inevitable now that the other two players will announce price hikes of their own.
One difference between Bord Gáis Energy and its rivals it that while it still needs regulator approval for gas price moves, both the ESB and Airtricity are under no such constraints, and can charge what they like.
While the company has stopped short of publicly confirming the price increases, it will make an announcement later this week. One line that will be trotted out at that point is that even after the increases, the cost of gas will still be lower than it was in 2006.
That comparison, while true, is largely without merit. We live in a very different world today. Five years ago, the economy was booming and employment was plentiful, and there was virtually no talk of people falling into arrears on domestic energy bills.
Bord Gáis Energy now has 114,000 customers in arrears of two months or more, an increase of 300 per cent on 2010. When bills increase, more people will inevitably struggle to pay them.
To its credit, the company recognises the seriousness of this issue, and has increased the number of staff working in its payment collection department by more than 400 per cent in the last year in order to tackle the crisis.
It is also rolling out pay-as-you-go meters to as many customers as it can convince to sign up for them.
But customers do not have to accept the increased charges lying down. They can offset the effects of the price hikes by switching to an alternative provider.
Customers who switch to ESB Electric Ireland, for example, and pay by direct debit, qualify for a 12 per cent discount on the current unit price of electricity. They also get another 3 per cent off if they switch to the company’s gas offering, and a further 2 per cent off if they sign up for online billing. The offer lasts until March of next year.
