Annual energy bills to fall by €300

ENERGY bills continue to fall with households now enjoying annual savings of €300.

A 10% cut in gas prices coming into effect fromOctober 1 will see average bills plunging from €924 this time last year to €737.

Households already enjoyed a 12% gas price cut in May and a 10% drop in electricity prices, with the average electricity bill falling from €884 to €795.

The almost 200,000 customers who have switched from the ESB to Bord Gáis for electricity can also cut a further 10% to 14% off their bills.

The Commission for Energy Regulation yesterday approved applications for price cuts from Bord Gáis and the ESB.

The ESB did not apply for a cut in electricity prices for households but businesses will see prices fall by 5.5% for electricity and 13.6% for gas. Bord Gáis domestic customers will see prices fall by 9.3%.

The regulator said there will be a further review of prices in the new year which he said “could go either way”.

However, Bord Gáis has said the latest cut would remain in place for at least a year because it has purchased between 60% and 70% of its gas needs for the next 12 months.

Consumers could be dealt a blow in October next year when a review is due and prices could increase.

Bord Gáis said the number of people that have made the switch from ESB is now close to the 200,000 mark – well ahead of its target.

It has 600,000 gas customers and its target is to have one million gas and electricity customers over the next couple of years.

It is promising customers who switch gas prices up to 14% lower than the ESB for one year from the date they first sign up and 5% cheaper in year two and three.

The ESB cannot reduce electricity prices and Bord Gáis cannot cut gas prices, even if fuel prices are low, as that function is reserved for the commission.

Bord Gáis does not need to apply to the regulator for a cut in electricity prices as it is not the dominant player in the market.

Energy Minister Eamon Ryan welcomed the price cuts, saying 2009 has been a good year for electricity and gas consumers.

“It is clear that the policy of greater competition in the Irish electricity market is yielding results for the consumer,” he said.

Bord Gáis said the latest cut will mean average gas prices will have dropped to levels 22% below the typical bill in October 2006.

Homeowners were given a further boost yesterday when the European Central Bank (ECB) signalled it would hold interest rates at their record low levels for now.

The ECB held rates at 1% and analysts said it is unlikely the bank will hike rates before summer of next year.

KBC economist, Austin Hughes said interest rate increases seem a “considerable distance away”.

The bank has dropped rates by 3.25% between October last year and May this year.

AIB economists said a further cut in interest rates seems “most unlikely” with leading economic indicators picking up in the eurozone and elsewhere.

They also said that the ECB is unlikely to be in any hurry to hike rates again.