Power to the people, but only if they decide to shop around... Charlie Weston

Energy suppliers don’t reward loyal customers – to make savings you need to switch, writes Personal Finance Editor

NOBODY can complain about there being a lack of choice when it comes to the residential energy market in this country.

There are currently 13 residential energy suppliers in Ireland, as every couple of months a new provider seems to enter the market.

And there is healthy price competition between them for your custom.

The plethora of players means that when you compare the energy sector to the banking sector or the telecommunications sector there’s far more choice for consumers and far more suppliers competing for their business.

Daragh Cassidy, of price comparison site Bonkers. ie, said it is ironic to have so much competition given that energy is such a generic product.

“Having 13 competitors feels insane for a market as small as Ireland’s,” he said, adding that it remains to be seen if the sector is big enough to accommodate so many players.

The pity is that all the competition has not really translated into lower prices across the board for consumers. Electricity prices here are the fourth highest in the EU, according to Eurostat.

Gas prices are around the seventh most expensive, despite Ireland having access to its own gas field.

The reasons for this are hotly debated, but Ireland’s island location doesn’t help, while our reliance on imported fossil fuels tends to drive up the cost also, Mr Cassidy said.

In the past few months, some suppliers have announced electricity price increases, including Electric Ireland.

This is impacting more than one million households.

Compounding this is a big increase in the Public Service Obligation (PSO) levy on all electricity bills to subsidise wind power, while a carbon tax rise on gas was announced in the budget.

The carbon tax will add almost €80 a year to the average annual gas bill once the latest increase kicks in in May, while the PSO levy adds almost €90 a year to electricity.

“At a time when energy use in the home has probably never been higher due to Covid, this is the last thing consumers need, and means shopping around to ensure you’re on the best energy deal is more important than ever,” Mr Cassidy said.

Businesses in this country seldom reward loyalty. This means that if you want the best deal you have to shop around regularly.

You can’t presume that just because you have been with a particular supplier for several years that they will return the favour with cheaper prices.

If anything, it’s the opposite, according to Mr Cassidy. This applies to all household bills, but particularly energy.

That’s because energy companies all offer really great introductory rates to those who switch to them. However, these discounted rates expire after 12 months.

If you don’t shop around and switch again after your 12 months you will be bumped onto the supplier’s far higher standard rates and will end up paying far more each year for your gas and electricity. Big discounts are available to those who switch.

Take someone who is paying standard rates, and uses an average amount of gas and electricity.

If they switch they could save €500 a year.

And if you live in a poorly insulated home, or in a home with more than three bedrooms, your savings are likely to be even more.

Every month, around 27,000 people switch electricity supplier, and 10,000 switch gas supplier, so it is worth joining them to benefit from the savings.

Most energy contracts last 12 months and usually anyone can switch outside of this timeframe.

If you switch while still in contract, however, you may be charged an early exit fee, which usually ranges from €50 for a single fuel contract, to €100 for dual fuel deals.

You should also ensure any arrears on your account have been cleared as this could hinder the switch, according to Bonkers.ie.

As well as switching, it is worth looking at ways you can reduce energy usage around the home.

Things like replacing all your bulbs with LEDs is a good start.

Replacing just one bulb will save you around €6 a year in electricity costs, and it’ll last far longer than a halogen bulb, too.

Turning down the thermostat by just one degree could save you around €150 a year.

And when buying new appliances like a dishwasher, fridge, washing machine, or hoover etc, look for the appliances that are as energy efficient as possible.

They might cost a bit more upfront but will more than pay for themselves over the medium term.

‘If you don’t switch after 12 months you will end up paying far more each year.’