ANALYSIS:For two years Bord Gáis and Airtricity undercut ESB prices and took its customers
THE NEWS that ESB Electric Ireland is cutting its prices by as much as 17 per cent from today will be welcomed by many cash-strapped consumers who should be able to knock nearly €200 off the cost of their annual electricity bill with a simple phone call.
The size of some of the electricity discounts the company is now offering is not unexpected. A significant price move had been anticipated with the full deregulation of the domestic electricity market.
It has been a long time coming. For two years, the ESB has watched powerlessly as its rivals in the Irish market, Bord Gáis Energy and Airtricity, undercut its prices by as much as 14 per cent and drained it of its customers in the process.
Between them, they have taken more than 800,000 customers off the ESB in just over two years and customers continue to desert the semi-State at a rate of 5,000 a week, and it has been unable to respond. Its prices have been rigidly controlled by the energy regulator to ensure new arrivals in the market were given a competitive edge over the one-time monopoly until its market share fell below 60 per cent. Earlier this year that magic number was reached and with deregulation kicking in today, the gloves have finally come off.
The main beneficiaries, at least in the short term, will be consumers. In the longer term, an absence of State control on prices will give the company the freedom to do what it likes when it comes to prices and consumers will have little comeback.
For now, however, the news is only good. New and returning customers who pay by direct debit – it is the only payment option available to them – will qualify for a 12 per cent discount on the current unit price of electricity.
They will also get another 3 per cent off if they switch to the company’s gas offering; from today ESB Electric Ireland has become a dual fuel supplier and entered the domestic gas market. It is promising users who switch discounted rates of up to 6 per cent on the regulated prices currently offered by Bord Gáis.
That is not all. The company has been smart in offering customers an incentive of a further 2 per cent off if they sign up for online billing.
Other big utilities have been anxious to move people away from paper bills but have approached it in another way by imposing charges on those who do not make the switch. Customers who have been with the ESB for more than 12 months without missing a payment will qualify for similar discounts, with similar incentives. Switching from another provider can be done online or over the phone in minutes. ESB Electrical Ireland is not going to lock new customers into long contracts, which makes the switch still more attractive.
The elephant in the room is arrears. While the discounts are available to new customers, existing customers who have a perfect payment history over the last 12 months, green customers and those who sign up for the household budget scheme, arguably those who need the discounts most are being excluded.
People in arrears or who have missed a payment over the last 12 months will not be able to take advantage of the discounts and will have to pay the standard regulated rates. Last year about 150,000 ESB customers entered into payment plans with the ESB after struggling to make payments.
