Lighting the way into the Republic’s energy market
Gas and electricity supplier Energia plans to enter the Republic this autumn, as a fourth supplier. So what can consumers expect?
“Given the stage that the process is at, at the moment, I could not comment further on our potential interest,” he says, adding, “if you want to speculate beyond that, we’ll not contradict you.”
In the more immediate future, Energia is gearing up to enter the domestic market in the Republic this autumn, a move that will see it taking on Bord Gáis.
It will offer both electricity and gas to households here, making it the fourth supplier and bringing with it the promise of increased competition, particularly, according to Thom, on the pricing front.
This marks something of an about-turn for the company. Four years ago, when Bord Gáis and Airtricity were preparing to enter the domestic market and go toe-to-toe with incumbent ESB, Energia hung back, saying it wanted to concentrate on the business market.
So why the change of heart and why now? “We’ve reflected on this over quite a period of time,” Thom says. “We’ve got very good credentials in the domestic market. We’ve got a very good exemplar in the mass market, which is very low cost.
“Throughout the economic cycle, we have managed to avoid large numbers of customer disconnections and yet we have maintained a very low level of bad debt in the business.
“What we have seen here is a relatively disorderly opening up of the market, with lots of people going for market share, losing a lot of money through that process, having a very poor bad-debt experience, disconnecting a lot of customers and causing some reputational damage in the process.”
Problems with customers in arrears have dogged the existing suppliers as the recession deepened over the past four to five years.
The general rate is about 10 per cent, not far off that which applies to mortgages, which is about 12 per cent.
Thom believes the market has settled down, though one thing his company would like to see is greater access to pre-pay meters, which he says have been helpful in controlling arrears in the North.
While Energia will be able to supply these in time, he argues that ESB Networks, which owns the power distribution network, should provide them, allowing consumers to keep their meters, even if they move supplier.
They then become part of the network’s assets and are paid for by the entire market as with all other equipment used to distribute electricity. The group has already discussed this with both the regulator and the Government.
But is it not simply asking the market as a whole to supply a piece of equipment that Energia wants at least some of its customers to have?
“Look, at the end of the day, if the customer wants that piece of kit we will, in due course, be able to supply it to them. That’s a product that we’re probably better set up to deliver, given our heritage, than others would be,” he says.
“We’re just concerned that, for an individual customer, is it the right way to go? It may lock people in to a supplier over a long period of time: they may not have access to discounts, they may actually be the type of customer that can least afford to bear the burden of the extra cost of that piece of hardware.”
The other problem is, if ESB Networks is supplying the meters, does that not give that company an advantage when it comes to recruiting customers?