Are electricity price cuts really benefitting customers?

When is a price cut not a price cut? That is the question that a reader called Stephen posed when he mailed us last week.

As you will no doubt be aware energy prices have soared in recent years. Since early in 2021 most of us have seen the cost of our domestic electricity and gas – if we have it – double.

There has been some better news in recent weeks with the main providers rolling out what they said were discounts of between 10 and 30 per cent.

But just how meaningful are those discounts?

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They are not at all meaningful for Stephen.

“Electric Ireland say they have reduced their unit rates but they have also reduced their discounts,” his mail starts.

“I’m coming to the end of my one-year contract with Electric Ireland and was given an 18 per cent discount last year, down from 30 per cent the previous year.”

The discount means he is currently paying 0.32 cent per unit of electricity used excluding VAT.

“After ringing Electric Ireland to sign up for another year they are now only offering [a] 5.5 per cent discount.”

He says that when the discount he is being offered totted up alongside the “new reduced rate they have been so gracious to tell everyone about” he will be paying 0.34 cent per unit excluding VAT. “So they are in fact increasing their take from consumers.”

It might be unfair to say they are increasing their take from all their consumers as a great many people who are not as assiduous as Stephen and who do not switch and end up paying the standard rates all the time will end up paying less.

But certainly, for those who were on big discounts that have now disappeared, the news is not so good.

We contacted Electric Ireland to see what it had to say. A spokesman said that Electric Ireland’s “retention offers change regularly for customers depending on business and market conditions. Our current retention offers also include a cash bonus which the customer in this case would have been offered and may not have taken into account.”

We also heard from a reader called Graham who had a more general energy query.

“The energy credits [of €450] are to be applied to our electricity bills. Why not applied to gas bills? I suspect that in many cases the spending on gas is higher than on electricity. Or why not split between both?”

He says the reason he asks is that “as pensioner with an electricity allowance and the energy credits my electricity bill is actually in credit!! My gas bill (heating) is sky-high but I can’t apply the energy credits to it. Just have to heat the house electrically until credits used up.”

It is a fair question. We suspect that the reason the credit is attached only to electricity bills is because that is a universal form of energy – everyone gets an electricity bill – while not every household in Ireland uses gas.