Electric Ireland’s selective disclosure of price increase leaves customer in the dark

Examining my recent gas bills from Electric Ireland, I find that the unit price charged after October 1st has increased by 47 per cent, not the 37.5 per cent announced by the company when informing its customer bases of the pending price increase.

In spite of letters and emails, I have been unable to get an adequate reply to explain the discrepancy. There may be a reasonable answer but I have been unable to get one. Am I being overcharged or what is going on?

Mr D O’S

I am not sure why it has proven so difficult for you to get a straightforward answer from Electric Ireland on this. There is a simple answer. Perhaps it is because it opens a Pandora’s box of other issues for Ireland’s largest energy supplier and others.

On the Money: the personal finance newsletter from The Irish Times

---

Hosting language students can boost your family’s finances

---

Insurance board’s Rosalind Carroll: ‘Soft tissue neck injuries are not coming as they would have before’

---

The outlook for interest rate cuts is changing - so should Irish borrowers be worried?

---

And it is counterproductive. In this case only a hermit would not be aware that wholesale energy prices have risen exponentially in the past year or more as Russia initially put some brakes on supplies to Europe in a row over a new gas pipeline – Nord Stream II – and then invaded its neighbour, Ukraine.

Homeowners know their energy bills are going to rise.

The increase to which you refer in October was the third this year by Electric Ireland. The cumulative increase in the unit rate for gas over those 2022 announcements has been over 142 per cent as far as we can determine. In other words, you are now paying well over double what you were paying per unit in April of this year before the first increase came into effect.

There has been much talk about customer focus this year from people like energy companies, other utility providers, banks and the like. Unfortunately, all too often the phrase is trotted out as they either increase their prices or reduce their service. It is almost like an anaesthetic to dull the customer to what is actually being done to them.

In this case, at the most generous, you would have to say Electric Ireland is being accurate without being entirely honest in the sense of being transparent with those customers on whom it professes to be focused.

When Electric Ireland announced on September 1st that it was going to increase prices from October 1st it stated: “Due to unprecedented increases in international energy market prices and their impact on wholesale gas prices Electric Ireland has today announced plans to increase residential electricity bills by 26.7 per cent and gas bills by 37.5 per cent, with effect from October 1st, 2022.”

It is a clear statement. There are no qualifying provisions. Any reasonable reader will assume that prices are jumping by 37.5 per cent for gas customers.

It is only when you get down to the footnotes – the small print – that you discover that “customers will see their gas unit rate increase by 47 per cent”.

How do you square that? A difference of almost 10 percentage points between the headline rate and the actual rate increase is a big deal for consumers, especially this year as prices are rising across the board for families and, in the case of Electric Ireland, there have already been two hefty increases in the previous five months.

You’re never actually told in the release but there is an obscure clue for the initiated in a second paragraph after the 37.5 per cent increase is announced. It says: “The increases equate to ... €42.99 per month on the average residential gas bill, based on the estimated annual bill as defined by the Commission for Regulation of Utilities (CRU).”

It turns out when I spoke to Electric Ireland that the 37.5 per cent increase is what you will notice on your overall bill if you are the “average residential gas customer”. Of course, by definition most of us are not. If you use more than the average amount of gas over the course of the year, the effective percentage increase will move up from 37.5 per cent towards the 47 per cent unit price increase; conversely, if you use less than the average, your percentage bill increase will be less than the 37.5 per cent figure.

But why would there be such a difference at the average bill?

That is down to the other elements of the gas bill. These are the standing charge, the carbon tax charge and VAT.

In this most recent increase Electric Ireland did not raise the standing charge, which had the effect of dulling the impact of the 47 per cent unit rate increase on the overall bill. The same is true for the carbon tax rate, which is imposed by Government and is set to take effect from May 1st each year.

[ Electric Ireland announces €50 credit for residential electricity customers ]

[ Can I share inheritance tax thresholds with family to cut tax bill? ]

[ When a bank ‘mistake’ appears to be no mistake at all ]

This is what I mean by accurate but not entirely honest. Electric Ireland is, to my mind deliberately, conflating the flat unit rate increase with the impact on an illustrative bill. If Electric Ireland was as customer focused as it professes to be, it would announce its unit rate increase up front and then explain its impact on the eventual bill. Every sensible consumer knows that, for the purpose of illustrating that impact, you have to decide on usage and therefore the average consumer is a valid choice. As long as it is labelled as such.

In this case Electric Ireland gets that part right. They do clarify that the worked example on what it means in euro and cent on your bill relates to the average consumer. However, critically, they never explain that the initial claim of the increase being 37.5 per cent is relevant only if you are this average consumer.

Electric Ireland may be in the firing line with this particular customer but it is not alone. A brief check on some of the other suppliers in the Irish market shows that they appear to be just as opaque in levelling with the customer when price increases have to be imposed – or worse.

Several, including Electric Ireland, have also increased their standing charge – a move which should not have any relation to the actual price of wholesale gas. In Electric Ireland’s case, it hiked the standing charge for gas customers by 31.9 per cent in August without any explanation about why it should be rising.

It is unclear from the announcement of their May increase what was increased and by how much because the company relies entirely on the average bill scenario and never clarifies what exactly the unit price increase is.

So the bottom line in relation to your query is that the unit rate increase is 47 per cent, as your bill tells you when you go to the trouble of working it out. And if you got down to the footnotes of the original release, you might have become aware of that, even if it would still leave you fairly confused as to where the arbitrary 37.5 per cent figure came from.

And if you got that far, you could have enjoyed the warm glow from the subsequent near full page exposition of how customer focused Electric Ireland is.

Why have you found it so difficult to get a straight answer from Electric Ireland? I cannot say but perhaps they rightly guessed you’d be pretty ticked off and opted instead to fudge the issue. I have seen one of the letters sent to you from someone in their residential customer service department and it appears to me deliberately obtuse and inaccurate.

A tip for Electric Ireland and the other utilities for 2023: if you are having to announce bad news to customer, be upfront about it and then explain it in ways that are genuinely helpful to the customer. That is transparent and is the least consumers can expect.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice