Thousands expected to take up Bord Gáis electricity deal

Tens of thousands of householders are expected to switch their electricity to Bord Gáis this year as the company commits to cut bills by 10%.

The gas supplier today effectively launched a price war by offering power to homes and said it plans to take 200,000 customers from the ESB within the coming 10 months.

And chief executive John Mullins vowed to undercut ESB for the next three years.

The Bord Gáis chief revealed hundreds of potential customers have already enquired about the new service and he expects to lure up to 1 million accounts from its main competitor within three years.

“This is about offering customers a real choice, but more importantly, the opportunity to make significant savings in their electricity costs,” said Mr Mullins.

ESB said the residential electricity market in Ireland has been fully open to competition for four years and welcomed its additional competition.

But a spokesman stressed the company is required to charge the rates for electricity as set by the Commission for Energy Regulation (CER).

“It is not allowed to discount from that rate,” the spokesman said.

“It is open for all competitors to charge what they like.”

However, CER – which at present only sets the ESB price after the firm details its costs of production and supply – revealed electricity rates will be cut this year.

“You can expect quite a good drop at some stage in 2009,” a CER spokesman said.

“It’s not a case of us telling them what they can charge. We can approve their tariffs. But we cannot allow them to sell electricity at a price below the cost of supplying the electricity.”

CER price changes in the last two years include a 12.5% hike in January 2007; followed a 6.5% drop in November; a 17.5% increase in August 2008; and just a 1% drop last month.

It will publish a consultation paper on electricity prices next week and is aiming to detail revised tariffs by the end of March.

But Mr Mullins vowed that whatever rate the regulator sets for ESB in the next three years, it would continue to offer a lower tariff.

He said its launch was an historical day for Ireland and would boost the economy and household savings during the recession.

Mr Mullins said it was up to him and his team to attract and keep customers.

“If you do not get the discount you are always free, no penalty, to go somewhere else,” he added.

“We have to make sure you are getting the best price and best service.”

Both Taoiseach Brian Cowen and Energy Minister Eamon Ryan have already said they expect ESB prices to drop by more than 10% this year.

Opposition parties, EirGrid, and Mr Ryan welcomed the commitment by Bord Gais to reduce prices.

“This is great news for the Irish economy,” said Minister Ryan.

“Competition in the electricity market is delivering – delivering new entrants and lower prices. This will help our national competitiveness and the spending power of our consumers.”

EirGrid’s Dermot Byrne, who runs Ireland’s independent power grid operator, added: “This announcement by Bord Gáis is a very positive development. It will boost competition and that will benefit consumers.”