Concern over energy price discrimination of customers
With the likely deregulation of the retail electricity market next month, the regulator is concerned certain customers may not enjoy the benefits of competition.
Some domestic customers, possibly in rural areas, may inadvertently end up subsidising discounts enjoyed by others.
The energy regulator announced yesterday it was launching a consultation on the sufficiency of consumer protection measures to prevent electricity suppliers like the ESB operating punitive price discrimination, following deregulation.
Some industry stakeholders hold fears the ESB, with its continuing dominance of the market, could charge its customers in urban areas like Dublin and Cork lower prices than customers in more rural, isolated, areas.
The CER has stressed customer protection with fair and transparent pricing is paramount in a deregulated market.
Deregulation for domestic users is expected to be triggered next month when ESB’s share of the retail market falls below 60% for the first time.
The move is expected to result in lower electricity prices for hard-pressed households as competition between the main suppliers is likely to intensify.
The regulator has also expressed hope it will result in more innovative offers and tariff schemes being made available.
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 — which have actively encouraged consumers to switch provider.
The ESB is also precluded from discriminating between different classes of customers.
It has meant the ESB must charge all domestic urban and rural customers the same rate.
However, the energy regulator has acknowledged that the ESB will no longer be subject to such restraints following deregulation of the market.
ESB is renaming its energy supply business as Electric Ireland as a condition imposed by the energy regulator to allow ESB set its own prices in the domestic electricity market.
It is estimated re-branding will cost the ESB in excess of €6m. However, the firm has said the cost of changing the name to will not impact on prices.
The new name will appear on bills from April 2011.
“With the deregulation of the domestic market, Electric Ireland will be free to set its own prices for all sections of the market. This means that it can employ price discrimination based on customer segmentation,” admitted the CER.
However, it noted that Electric Ireland could target “sticky” customers, consumers who have never switched electricity supplier. But the regulator also accepts the introduction of a non-discrimination clause could inadvertently reduce competition.
ESB has suffered a net loss of almost 344,000 customers over the past 12 months, according to official figures.
