Panda Power and the shake-up in the Irish energy market

A recycling company called after a Chinese bear has entered the electricity market promising to supply only green energy to Irish consumers at a discounted rate which could save them almost €160 a year.

Truly we live in interesting times.

Earlier this week the Commission for Energy Regulation (CER) gave the green light to Panda Power to become the fifth supplier of domestic electricity in the Republic.

Its introductory unit price of 15.47 cent represents an 18 per cent reduction on standard prices and makes it the cheapest supplier in the market, although not by a whole lot.

All of the companies offer substantial discounts to new and switching customers and incentivise them further to set up direct debits and opt for online billing.

The key phrase in that sentence is “new and switching”. While discounts are available, they are not given as standard. This goes some way towards explaining why Irish consumers pay more than most for electricity.

How much more? The Republic had the third-highest household electricity prices in the EU in the second half of 2014, according to Eurostat figures last week.

The report found that Irish consumers have to pay an average of €25.40 per 100 kilowatt hours while the average price across the EU is just €20.80.

There was a 5.4 per cent increase in household electricity prices in Ireland between the second half of 2013 and the second half of 2014, the third-biggest after France and Luxembourg. The EU average increase for the same period was 2.9 per cent.

One of the reasons we pay more than most countries in Europe is that all the suppliers know we will stand for it because we can be remarkably passive when it comes to shopping around for better value.

Panda is hoping to attract as many as 150,000 customers in the first phase of its rollout, but that figure may be optimistic given Irish consumers’ general apathy with regard to making switches.

All told, only 15 per cent have switched in the last 12 months, which means the vast majority of us are paying for our electricity at the highest possible rate.

It might be helpful to add some numbers to that sentence. About 1.6 million Irish households are paying €150 a year more than they need to for their electricity.

That means that, collectively, we are wasting a staggering €240 million every year by not being more proactive when it comes to switching electricity provider.