Lecky prices set to fall after ruling
Some rare good news for consumers today. The ESB could reduce electricity prices by as much as 10 per cent within weeks following a decision of the energy sector regulator to open up fully the domestic electricity market early next month.
The announcement yesterday by the Commission for Energy Regulation will allow the ESB to match or even undercut its competitors from April 4th.
The deregulation decision means the company will also no longer need the approval of the commission if it wants to increase or reduce prices.
The power struggle (ha!) between the ESB, Bord Gáis Energy and Airtricity is also set to intensify on a different front as the ESB is to become a dual fuel supplier by entering the domestic gas market.
The ESB has seen its share of the domestic electricity market shrink to less than 60 per cent in just two years as both Bord Gáis Energy and Airtricity undercut it by as much as 14 per cent. Last year the ESB promised to match its rivals’ prices when it was allowed to do so by the regulator.
If it fulfils its promise and goes a step further by undercutting them in an attempt to win back some of the one million customers it has lost, consumers could see their bills fall significantly. A price war might go some way to offsetting widely anticipated energy price increases coming down the tracks as a result of volatility on international markets.
When Bord Gáis Energy entered the domestic market in 2009 it promised to undercut the ESB’s domestic energy prices for the first three years of operation.
It said it would charge customers who switched from the ESB at least 10 per cent less in the first year and at least 5 per cent in years two and three.
Last year, it rowed back on that promise and instead offered a 10 per cent discount in year two and no commitment on discounts for the third and subsequent years. At the time, it blamed the commission for moving too quickly to deregulate the energy market.
People who switched to Airtricity, meanwhile, were given the carrot of savings of up to 13 per cent.
“Deregulation of prices will help provide further choice and competitive prices in the long run,” commission chairman Michael Tutty said yesterday.
The commission’s announcement was welcomed by both the company and consumer groups. ESB chief executive Padraig McManus described it as a “significant milestone” that would enable the company to “actively compete in the residential market”.
The Consumer Association of Ireland’s chief executive Dermott Jewell said it was a good day for consumers. “We have waited a long time for this to happen, and for much of that time the ESB was saying that if the regulator removed its shackles it would be able to aggressively compete on price.”
As part of the deregulation process the ESB is undergoing a substantial rebranding, and from next month its supply business will be known as Electric Ireland.