Bord Gáis asks energy regulator for 9.3% price cut

BORD GÁIS is proposing an almost 10 per cent cut in the price of gas for the 12-month period beginning on October 1st.

In a proposal submitted to the Commission for Energy Regulation (CER), the body which sets energy prices, Bord Gáis says that the decrease will reduce gas prices by 9.3 per cent for residential customers and 13.6 per cent for small- and medium-sized businesses.

The proposed cuts would be in addition to the 12 per cent reduction in gas prices announced by Bord Gáis in May.

Managing director of Bord Gáis Energy David Bunworth said that if the cuts are implemented, average gas prices will be 22 per cent lower than their October 2006 level.

“After the peak in energy prices last year, we’ve seen a reduction in wholesale gas prices in recent months. We are passing on this reduction to our customers, at what is a difficult time.”

Bord Gáis’s proposal comes in advance of an open forum next week which is being organised by the Commission for Energy Regulation, at which the ESB and Bord Gáis Energy will present their price proposals for the tariff year 2009/10.

CER would not comment on yesterday’s announcement, but a spokesman said it would comment in relation to electricity and gas prices by the end of this week. It is expected that CER’s official decision on tariffs for 2009-2010 period will be made in early September, with the changes implemented in early October. Although the gas market was liberalised in 2007, Bord Gáis is the only supplier of gas to residential customers in Ireland.

Mr Bunworth said he is “confident” that the proposals on gas pricing will be implemented. Asked if the tariff could be reduced even further, he said that if wholesale prices softened in the next few weeks, a further drop of 0.5 per cent could be possible.

He said that the main reason for the proposed price drop is the fall in international energy prices. “Because of the economic slowdown there has been a fall in demand for gas from companies in the UK,” he said. “On the supply side, gas supplies into the UK are very strong, particularly from Norway.”

Bord Gáis sources 85 per cent of its gas from the UK. Earlier this year the commercial State body entered the electricity supply market for the first time. It now has 630,000 gas and electricity customers.

In terms of new gas customers, Mr Bunworth said that the number of Bord Gáis’s residential customers has “probably peaked”. “The infrastructure to take on more users is not there. We’ve reached saturation point in terms of available network,” he said.

He added that most of the growth in customer base over the last few years had been attributable to newly built apartments and housing estates.

The housing slowdown has meant that the company has seen “very little” growth in terms of new customers.

Although welcoming the proposal, Fine Gael spokesman on energy Simon Coveney pointed out that the proposed cuts should be seen in the context of continuing price reviews by the Commission for Energy Regulation.

“Bord Gáis has been under pressure to reduce energy prices. In a sense they are anticipating a price cut that would have happened anyway.”