Would you like to save €400 this year and every year? Here's how...
Consumers wasting hundreds each year by not availing of cheaper rates at different companies
Around 1.3 million utility customers wasted hundreds of euro each last year or a combined total of half a billion euro by not switching provider. Image: iStock
About half a million Irish people have collectively wasted at least €2 billion over the last 10 years simply because they’ve not bothered to pick up the phone to make a few calls.
You may think we have lost the run of ourselves and are quoting a figure which is outlandishly high but it’s actually a conservative estimate of the cash wasted by consumers who have never or only rarely switched their gas or electricity provider.
Are you one of them?
Chances are you are. Last week, the Commission for Regulation of Utilities (CRU) published its annual report and it found that the vast majority of gas and electricity customers did not switch last year. Many will never have switched or only done so more than a decade ago when the market was opened up and Lucy Kennedy told us to get switching.
The report said consumers who failed to switch gas or electricity suppliers over the last four years have paid almost €1,700 more in utility bills than if they had made the move.
According to the independent energy regulator, people who switched or renegotiated every year for the last four years could have saved €704 on gas, €1,097 on electricity or €1,696 on their dual fuel costs.
While it said switching rates were “robust” only 14 per cent of electricity customers and 20 per cent of gas customers actually moved supplier in 2018. A small number of others renegotiated better deals with existing providers but that still meant three-quarters of Irish consumers were static in the electricity and gas market.
All told then, around 1.3 million utility customers wasted hundreds of euro each last year or a combined total of half a billion euro. And that is in a single year.
There’s still a large section of the population who will bemoan the price of services in Ireland, but do very little about it.
The CRU said switching rates were at an eight-year high and attributed that to its implementation of new consumer protection measures.
Companies now have to give an annual prompt to customers who have been on the same tariff for three years or more to tell them of other energy offers available. Suppliers must also give customers 30 days’ notice prior to the end of a fixed-term contract and provide an estimated annual bill in their marketing material to offer customers “an easy to understand, transparent way to compare offers from different suppliers”.
That sounds great and suggests the CRU is being proactive but it does depend on customers actually reading the material sent to them by suppliers. Far too many people don’t do that. The fact that bills are nigh on incomprehensible does not help. The bottom line is far too many people are not switching.
According to Daragh Cassidy from utility price comparison website bonkers.ie “someone could save around €400 on average by switching. However, if you live in a poorly insulated home or a home with more than three bedrooms, your savings are likely to be even higher.”
He says that “some people are great at managing their money, are very frugal, realise the savings to be made, and will switch their bills every year or so in order to save money. However, there’s still a large section of the population who will bemoan the price of services in Ireland, but do very little about it.”
He makes the point that in order to know what you could save “you need to have an idea of what you’re paying in the first place. And yet when you ask most people what their average annual spend on energy is, even a guesstimate, they often haven’t a clue”.
He says there are three obstacles to people switching. “Firstly, people don’t realise the savings that are available despite the fact that they could save hundreds a year. Secondly, people think the process will be too cumbersome, which is a shame as switching energy supplier is genuinely one of the quickest and easiest household bills to switch.”
He also suggests that people “are sometimes afraid that something will go wrong during the switch-over process and that they could be disconnected and left in the dark”.
That does not happen because unlike switching broadband provider, for example, where new equipment might have to be installed, potentially leading to a disruption in service, “no new pipes or wires are being laid down. You’re only switching supplier – you’ll still be getting your gas and electricity through the same network so there’s no fear of a disruption to your service.”
He reckons that a lot of switchers tend to be serial switchers which means that many of the 14 per cent or 20 per cent referred to in the CRU report who are switching “are largely made up of the same people every year. This means up to 80 per cent of people may not have switched or at least may not have switched within a few years”.
All told 42 per cent of respondents said they paid over the odds because “switching seemed like too much hassle”
Eoin Clarke of Switcher.ie – a company that also operates in the switching space (the hint is in the name) – says that over recent years the percentage of energy customers has hovered between 14 and 16 per cent and he says there “is no substantial year-on-year growth in switching”.
He says based on the most up-to-date data, people switching their gas provider only could save €152.50 while those who switch only their electricity provider could save €205.25. A customer who switches both would save a very precise €409.33. He says the figure “is based on the national average consumption, typically a three-bedroom house. Savings could be greater depending on the property and consumption.”
He says the latest data indicates that many customers “are not aware of the savings that can be made by switching energy supplier. Customers who don’t switch regularly will be long gone off any discounted rates they may have availed of when they first signed up, and although some providers offer ongoing year-on-year discounts, these generally will not be as high as the discounts offered to new customers.
Switcher commissioned research into why people don’t switch and, it has to be said, the answers were pretty depressing. All told 42 per cent said they paid over the odds because “switching seemed like too much hassle”.
A further 28 per cent said they didn’t switch “because they couldn’t tell if a new supplier would save them money while 26 per cent said they did not want to get tied into a contract. A similar number said they were unsure if the product offered by the new supplier was the same as the one offered by their previous supplier. And finally 8 per cent of those polled said they were frightened of losing their service or getting cut off.
Clarke said the CRU’s description of the switching market as “robust” may “not be the best description, consistent is more accurate, approximately the same percentage of households are switching each year”.
He said that the “most important thing to know is that simply sticking with an existing supplier – particularly if you’ve been with them for a long time already – will frequently land you with a higher bill than if you shopped around. We’d strongly advise customers to set aside some time to take a look at their energy bills and shop around for new deals – regular switching will pay huge dividends and could free up some much-needed cash”.
How much can I save by switching utilities?
A lot. If you have not changed your energy supplier in the past couple of years, you are wasting money and with just a few minutes research and a couple of phone calls to providers you could see the cost of your gas and electricity fall by €400 a year. Bear in mind that is an after-tax saving and the gross saving to many people will be around €800.
But switching is complicated, right?
Quite the opposite, in fact. While finding a new mortgage or health insurance provider or changing your phone or broadband supplier can be fraught, changing gas and electricity providers is very easy. It can be done over the telephone in less than 10 minutes and it is even easier to switch online.
Okay, so where do I start?
The first things you need are copies of your most recent gas or electricity bill, or both if you’re a dual fuel customer. You also need your Gas Point Reference Number or Meter Point Reference Number, so energy suppliers can identify your property.
Where would I find these numbers?
They are on your bills. If you can’t find a bill call your provider to get them. Then you need a current gas and/or electricity meter reading, so your old supplier can provide you with a final bill and your new supplier can start from that point.
And who should I call?
The first and easiest thing to do is call your existing provider and tell them you are taking your business elsewhere unless they give you a better deal. And by better deal you should expect to be offered a discount of between 10 and 20 per cent on what you are paying. If they refuse simply go elsewhere. All companies offer substantial discounts to new customers.
Which ones are the best value?
It depends on the size of your house and your usage patterns. The cheapest energy supplier will depend on factors such as how much energy you use, whether you’re an urban or rural customer, whether you have a Night Saver meter installed – and if so how much energy you use at night. The best thing is to use a price comparison site and input as much detail as possible and then get a result that’s tailored to your personal energy usage and circumstances.
Can you give me a rough guide to what deals are out there?
Okay so, someone switching from the standard tariff with one of the providers to the Flogas Icebreaker deal can save an average of €152.50 a year. Someone switching electricity provider only can save €205.25 by signing up for Energia while a dual fuel customer can save €409.33 on the standard rate by switching to the same company.
Is there a difference in terms of quality between providers?
No. What people need to remember is that regardless of your supplier, everyone’s gas and electricity comes through the same pipes and lines. There’s no difference in quality so price is the main factor people need to consider when switching.
How much have prices climbed by over the last 18 months?
All of Ireland’s energy suppliers announced price hikes in the last 18 months. Some suppliers raised their prices twice during that period. Some energy customers have seen their energy bills jump up by €295 during that period (figure quoted is gas and electricity combined based on the national average consumption).
What direction do you think prices are going to go in the months ahead?
Irish suppliers all cited one reason for increasing their prices, the cost of wholesale energy. The wholesale energy market can be volatile, but right now it looks like we’re entering a period where there will be no price hikes. Recent reports suggest gas wholesale prices are down year on year. Suppliers purchase wholesale energy in bulk, in advance. If wholesale energy costs continue to drop, there will be a lot of pressure on suppliers to pass savings on to consumers.
Is there anything else I need to know?
To make sure you’re on the cheapest energy deal, you need to switch every year when you are out of contract. Some dual fuel offers on the market can increase by as much as €580 in year two when your introductory discount ends. Don’t languish on an expensive standard tariffs when there is no need to.