Electricity bills: What are your options for cheaper deals as prices surge?

Welcome to another edition of On the Money, our personal finance newsletter. Energy prices are back in the news, as they tend to be at this time of year when the big winter bills hit our doormats.

They usually land with a thud.

Figures from the Central Statistics Office last week showed that wholesale electricity prices jumped by a shocking 67 per cent between January last year and last month. The price jumped by more than 20 per cent between December and January alone.

Wholesale prices are the prices paid by the suppliers of your electricity to the companies generating that power and so that sort of increase gives cause for concern, even if wholesale prices are still down about 50 per cent from the post-Ukraine invasion peak, according to the CSO.

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Observers, including Bonkers.ie’s Daragh Cassidy, caution that wholesale prices at those levels mean consumers can expect little in the way of price cuts for their electricity usage this year. And even if prices do fall, regulator-sanctioned charges to electricity suppliers for grid updates likely later this year may well be passed on to householders.

Even before those figures emerged, Ireland was paying, by some distance, the highest price for electricity across the EU. Eurostat data shows Irish households were paying an average of 38.56 cent per kilowatt hour of electricity in the first half of last year before VAT and other taxes.

That is over eight cent ahead of Luxembourg, the next most expensive, and a full 10 cent/kWh ahead of people in Germany. The EU average was 21.87 cent/kWh while, across the euro zone, it was 23.78 cent/kWh.

When it comes to electricity prices, we are, it appears, very much in a league of our own.

So it makes more sense than ever to keep an eye on your bills, the little changes you can make that might reduce them and also take the time to shop around each year for the best value.

Switching between electricity providers is more pain-free than moving bank or even than moving your car or home insurer, so there’s no reason to stick with a company offering you a less competitive deal.

“Anyone on standard rates will be paying around 35 or 36 cent per kilowatt hour including VAT for their electricity at present,” Cassidy says. “But rates under 25 cent are on offer from some suppliers to new customers for a year, which equates to a saving of over €400 a year for the average household.

There are currently 11 providers in the Irish electricity market – seven of whom also offer “dual fuel” bundles for households with electricity and gas.

They are: Electric Ireland, Energia, SSE Electricity, Bord Gáis Éireann, Flogas, Yuno Energy, Prepay Power, Pinergy, EcoPower and Waterpower.

A quick run through a price comparison website such as Bonkers.ie or Switcher.ie will let you compare plans on offer. There are a few things they will want to know, including whether you live in an urban or rural area, whether you have a standard meter or a more modern smart meter, whether you have a special night meter and whether you want to include cashback offers.

They will also ask whether you know how much electricity you use. If you know, great, you’ll get a more accurate estimate of what you might expect to pay. But don’t worry if you don’t have that detail to hand: you can simply ask for a quote based on national average use – which seems to be 4,200 kilowatt hours – and at least you will be comparing each of the offers on a like-for-like basis.

Given that you will generally only get offers from providers other than your current one, you may not see your current supplier on the list on these sites. That doesn’t mean you cannot get in touch with them and ask for their best offer.

Obviously the bottom line is the key thing and, on the basis of national average usage in an urban area with a standard 24-hour meter, the annual projected cost ranges from €1,270.44 to €2,043.98. That’s a difference of close to €775 a year or almost €65 a month, which is significant.

And remember, those are special introductory offers. The standard rate on your existing plan is likely to be higher.

Given that your usage is likely to be somewhat different from the “national average”, there are a couple of things you should keep an eye on.

First, and most importantly, the unit rate.

At the national average usage of 4,200 kWh a year, the market leader right now is Energia according to the price comparison sites. Its €1,270.44 estimated annual bill is based on a unit price of 21.66 cent per kWh. Allow for 9 per cent VAT, this rises to 23.6094c/kWh.

On top of that you’ll have an annual standing charge which can also vary from supplier to supplier – it’s €217.08 at Energia (€236.62 incl. VAT) and the annual public service obligation (PSO) levy we all have to pay which, in this case, would be €38.74 (€42.23 incl. VAT).

Second best right now is Bord Gáis Éireann, where the unit rate is over a cent higher at 22.86c/kWh (24.9174 cent incl. VAT), with a more competitive annual standing charge of €200.50 (€218.55 incl. VAT) and the same PSO levy.

Third comes Electric Ireland, and this is where it gets interesting. Its unit charge is 22.32c/kWh (24.3288 cent incl. VAT). That is lower than the Bord Gáis rate but, for people using electricity at the national average, that cheaper unit rate is more than offset by a €230.06 (€250.77 incl. VAT) annual standing charge.

Over the course of a year on the basis of the parameters given, Electric Ireland at €1,314.80 a year will cost you €7.50 more than Bord Gáis’s €1.307.30.

But if your household uses more electricity than the national average, that lower unit price at Electric Ireland means it might be a better choice for you than Bord Gáis.

Interestingly, Bord Gáis also offers the fourth most competitive plan but that’s at a higher unit rate of 23.87c/kWh (26.0183 cent incl. VAT) so I am not quite sure why anyone would go for that.

It is worth noting also that Bord Gáis does offer a €50 “welcome bonus”, which would make its more competitive plan the market leader in terms of overall cost in that first year. You do need to look at all elements of the package offered and your usage to get an accurate fix on which is best for you.

Of the big players, SSE is currently the least competitive at €1,402.52 for the year, with a unit charge on its best offer of 24.45c/kWh (26.6505 cent incl. VAT) and annual standing charge of €221.08 (€240.98 incl. VAT).

All plans tend to have 12-month lock-in periods and it is good practice to switch, or threaten to, each year to secure the best package available.

It is also worth bearing in mind that the pricing on all the plans quoted above is variable. That means you can sign up at the advertised price and find the price rising over the course of your one-year contract. This is because these plans are normally structured as percentage discounts from the standard rate. If the standard rate goes up, you still get that percentage discount but the price still rises.

You can generally get out of the one-year lock-in if a far better offer comes along but you will face an early exit charge – usually about €50. You can also expect to be obliged to pay by direct debit and work with paperless billing for the most competitive deals.

For reasons that I do not fully understand, people whose bill tells them they are classed as rural will pay slightly more than all the figures listed above.

And finally, remember, almost all of these deals are for one year. If you do nothing at that point, you can find yourself moving back off the discounted rates again, jacking up your bill. So it pays to make a note in your diary a couple of weeks before your 12-month contract period comes to an end.

You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter by Joanne Hunt on how driving more slowly can save you money, you can read it here.