Electricity consumers may soon enjoy lower prices

CONSUMERS got some good news yesterday with the prospect of falling electricity prices following the announcement by the Commission for Energy Regulation that the electricity market is likely to be deregulated later this year.

Deregulation of the electricity market for domestic users could trigger a price war for the benefit of hard-pressed households as it would allow the main supplier, ESB, to lower its prices for the first time in years.

Under the current regulation of the industry, ESB has not been permitted to alter its prices to challenge its main rivals, Bord Gáis and Airtricity, as a measure to allow both other providers gain a share of the overall market.

However, the CER has predicted that the current level of switching between suppliers could allow deregulation of the market as early as April 1 following its latest review of competition in the electricity retail sector.

Deregulation can be triggered if ESB’s share of the domestic market falls below 60%, and there are at least two other suppliers who each hold a minimum 10% of the market.

In 2010, ESB lost almost 322,000 customers to its main competitors, according to official CER figures. It also recorded a net loss of more than 5,400 domestic customers in the first two weeks of 2011.

The CER said yesterday that ESB had 60.4% of the domestic market at the end of December — just above the threshold to allow deregulation. It has estimated the ESB’s share of the market will have fallen to 57% by next month.

The CER said over one in five of all households switched electricity supplier during 2010.

However, it said deregulation would not take place until the ESB had satisfied the regulator about the re-branding of its supply businesses in the form of changing its name to Electricity Ireland.

“Further steps and milestones remain to be completed prior to deregulation taking place,” said the CER.

Competition in the business sector for electricity was deregulated last October when the ESB’s share of that market had fallen below 50%.

The cost of electricity for all domestic users rose by almost 5% last October as a result of a Government levy to fund wind power and subsidise inefficient peat-fuelled generating stations.