Electricity

It took a long time, but some four years after the domestic electricity market was opened up to competition in 2005, ESB finally got some competition.

Semi-state company Bord Gais entered the market in February 2009, closely followed by renewable energy firm Airtricity.

Both firms claimed they will undercut ESB’s prices by at least 10pc, which could save the average consumer €100-120 a year on their bills. Bord Gais Energy (BGE) says it will guarantee at least 10pc lower prices than ESB for the first year.

Customers can now easily switch to either company by going online or by telephone.

And many of them have. Since February 2009, when BGE and Airtricity launched their switching campaigns aimed at winning new household electricity customers away from ESB, nearly 500,000 customers have made the switch.

At the moment, BGE still promises to undercut ESB’s prices by between 10 and 14pc for the first year for customers who switch to them, which would fall to 5pc for years two and three.

Airtricity offers a similar deal: a discount of up to 13pc on ESB’s regulated unit rates (which is says is the equivalent of five weeks free home electricity per year), dropping to 5pc thereafter.

Ireland’s electricity prices have consistently been among the highest in Europe. A new EU report reveals that pre-tax electricity prices here are now up to three times higher than in the cheapest EU member states.

The fact that Ireland pays so much for its electricity is usually blamed on the small size of the market here, but also our over-reliance on fossil fuels for generation.

We should see even more competition once the Commission for Energy Regulation, which regulates electricity prices, ends price regulation in the domestic sector in the not-too-distant future.

At the moment, ESB cannot react to the new competition, as it must get approval for all price moves from the CER.

If and when price regulation ceases, this means ESB should be able to set its own prices and compete directly and on the same basis as the independent suppliers in all market segments.

The Government’s four-year, €1 billion plan to roll out ‘smart meters’ to every household has the potential to be one of the most effective ways to help us slash our electricity bills.

These meters are designed to operate like fuel gauges in cars, showing users at all times exactly how much electricity they are using and at what cost. The meters will also allow you to sell home-generated, renewable electricity back into the national grid.

In the meantime, we can take simple measures to try and be more energy-efficient with our electricity usage.

For example:

• Fit energy-saving light bulbs
• Buy electrical household appliances with an A-rating energy label.
• Have a shower instead of a bath
• Fit or use a timer on immersion water heaters
• If your freezer isn’t a frost-free energy efficient model, defrost it at least once a year
• Reduce the temperature of washes on dishwashers and washing machines
• Dry clothes on a washing line or horse instead of a tumble dryer
• Don’t leave appliances on standby – turn them off at the plug.

How much you pay for your electricity depends on how you pay, what tariff you choose and whether you live in an urban or a rural area.

Paying by direct debit can be cheaper than other methods such as cheque, as both BGE and Airtricity offer a discount if you agree to a direct debit mandate.

You can pick a standard day tariff or a ‘nightsaver’ tariff. Basically, night tariffs involve higher cost by day and a higher standing order charge. It is generally only worth considering if you make high usage of electricity at night.

Households designated as being located in urban areas pay a higher rate than those in rural areas.

If you are a heavy user of electricity during the winter but less so at other times of the year, Airtricity offers a ‘budget plan’ that allows you to spread the cost of your bills more evenly over 12 months.

If you are thinking about switching suppliers, you should try to make realistic price comparisons by using your actual data from recent bills.

Make sure you are comparing like with like to see if you would be getting better value, as some tariffs may apply to different usage rates.

If you were among the first of the over 400,000 households who made a switch away from ESB early last year, the discounts in excess of 10pc you have enjoyed on ESB’s prices will already have dropped - or will fall shortly - to 5pc.

But there is a way to continue enjoying higher discounts for at least nine months if you move now by simply switching again.

For example, if you switched to BGE, you could switch again to Airtricity as its first year 13pc discount offer to new customers is due to end on the 31st of this month, although it will only guarantee this discount until the end of 2010.

Similarly, if you switched to Airtricity, you could switch to BGE and avail of discounts of between 10pc and 14pc for the first year. BGE says it has no immediate plans to close this offer.

Neither BGE nor Airtricity require you to sign a minimum contract, so you can switch anytime.

The switching process takes minutes and is done remotely: no re-wiring or modifications of any kind are required to your home or meter.

There is no charge for switching either, even for switching back to ESB.

However, the CER advises that to be sure of getting the process done and dusted as quickly as possible, you should provide a meter reading at the time of switching,