Electricity & Gas Retail Markets Annual Report 2013

Transcription

1 Electricity & Gas Retail Markets Annual Report 2013 DOCUMENT TYPE: REFERENCE: Information Paper CER/14/134 DATE PUBLISHED: 25 th June 2014 QUERIES TO: Adrienne Costello The Commission for Energy Regulation, The Exchange, Belgard Square North, Tallaght, Dublin 24.

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3 Executive Summary The purpose of this paper is to provide industry and interested stakeholders with relevant information on the developments of competition in the electricity and gas retail markets in Market Shares Competition continued to develop in the electricity and gas retail markets in There was one new entrant in the domestic electricity market, Pinergy. More recently in January 2014, Energia entered the domestic market in both gas and electricity. In electricity, Electric Ireland continues to be the largest supplier in terms of customers across all market segments and in terms of MWhs, except in the medium business market. Energia remains the largest supplier (in terms of MWhs) in the medium business market but is no longer the largest supplier in consumption terms in the small-business market. In gas, Bord Gáis Energy remains the largest supplier in terms of customer numbers and consumption in domestic, IC and FVT markets. In the RTF market Energia has the highest GWhs and customer number share. The CER will continue to monitor both markets to ensure the continued development of competition. Customer Switching Switching between suppliers is an important metric of competition and consumer engagement in the retail markets. Switching is continuing in both the electricity and gas markets and switching rates are above 10% in both markets. Under the VaasaETT description of the levels of switching, the Irish electricity market is considered a warm active market and the gas market is considered a hot market. The total number of switches completed in the electricity market in 2013 was 266,224, representing an increase of 5.6% compared to The level of switching in electricity has been at a relatively stable level since September The total number of switches completed in the gas market in 2013 was 117,002, representing an increase of +5.8% compared to PrePayPower experienced the highest net gain of customers in electricity in 2013 and Electric Ireland experienced the highest net gain in gas. Bord Gáis Energy experienced the highest net loss of customers in both markets. Given the importance of high rates of switching in sustaining the intensity of competition between suppliers in the energy markets, the CER continues to publish monthly switching reports to assess the trends and the level of customer engagement in the electricity and gas markets. Competition and Deregulation All electricity market segments are deregulated and the gas business market segments are deregulated. The domestic gas market is the only market still regulated. 3

4 At the end of 2013, Bord Gáis Energy s market share at 57.19% was above the threshold of 55% without rebranding, which the CER set as the threshold for the deregulation of the domestic gas market. A decision paper CER/14/117 NDM Domestic Gas Market Deregulation Decision was published in May 2014 which outlined the CER s decision with regard to the deregulation of the domestic retail gas market. The domestic gas market will be deregulated on 01 st July The CER will continue to monitor the gas and electricity markets and should it feel that customers are not benefitting from deregulation of the sector; the CER will use its regulatory powers to intervene and improve matters. Prices All suppliers are required to publish details of the tariff plans that are available to domestic customers. In 2013 Ireland s second price comparison website was accredited and one such website was audited. These developments serve to provide customers with more clarity and transparency in relation to prices and ease of comparison across suppliers. On average, the most recently available data from Eurostat shows that Irish electricity and gas prices are above the EU area average. All domestic gas and electricity suppliers introduced price increases in late 2013 or early Customer Protection, Debt and Disconnections Electricity and gas disconnections for non-payment of account are monitored on an ongoing basis by CER. Total disconnections in 2013 were 12,391 in electricity and 6,279 in gas, representing decreases of 29% and 17% respectively. Estimated data shows that over 40% of the domestic sites in electricity that were disconnected were suspected to be vacant and 35% in gas were suspect vacant. There were declines in the number of domestic disconnections in both electricity and gas during The decline in electricity disconnections can be partly explained by the increase in the number PAYG meters installed for customers in arrears compared to There were reductions in electricity disconnections across all suppliers compared to The level of disconnections varies by gas supplier. SSE Airtricity and Electric Ireland recorded increases in domestic disconnections compared to Both suppliers attribute the increase in disconnections to the date of their respective market entry in the domestic gas market. A number of actions have been taken to ensure that disconnections continue to be minimised. Suppliers can only pass on 50% of the charge for a disconnection or reconnection for reason of non-payment to a customer experiencing financial hardship. There continues to be stringent obligations on suppliers to make disconnections the last resort. In November 2013 the CER published an audit 1 of supplier s compliance with the code of practice on domestic disconnections. The audit found that suppliers are adhering to the minimum standards as set out in the Supplier Handbook. 1 CER 13/248, Audit of Compliance with the Code of Practice on Disconnections for the Domestic Market, 11 November

5 The CER continues to engage with stakeholders to ensure that the measures currently in place continue to support customers in genuine difficulty. Next Steps The CER will continue to monitor the electricity and gas retail markets throughout The next retail markets report will cover Q Monthly switching reports and Domestic Disconnection monitoring notes will continue to be published. The CER published a consultation paper on a new market monitoring framework in December This paper outlined the CER s proposals in relation to the indicators to be collected from stakeholders as part of a new market monitoring framework. The CER will publish a decision in due course and work will commence on implementation during In May 2014, the CER published a consultation paper, Debt Management Debt Transfer & Debt Flagging (CER/14/119). This paper seeks comment on proposed changes to industry systems/processes to facilitate the repayment of debt by PAYG customers in arrears after a change of supplier and it also seeks comment on the current debt flagging thresholds. 5

6 Table of Contents 1.0 Introduction The Commission for Energy Regulation Objective of Report Energy Market Structure and Developments Introduction Active Suppliers and New Entrants Market Developments Market Share Consumption & Customer Numbers Introduction Electricity Market Overall Trends in Retail Electricity Domestic Electricity Market Small-Sized Business Electricity Market Medium-Sized Business Electricity Market Large Energy Users (LEUs) Gas Market Overall Trends in Retail Gas Domestic Gas Market Industrial and Commercial (IC) Gas Market Fuel Variation Tariff (FVT) Gas Market Regulated Tariff Formula (RTF) Summary - Market Share Customer Switching and New Registrations Introduction Electricity Market Switching & New Registrations Total Switching Switching by Customer Category Net Switching by Supplier New Registrations Gas Market Switching & New Registrations Total Switching Switching by Customer Category Net Switching by Supplier New Registrations Summary Customer Switching Competition and Deregulation Introduction Deregulation in Electricity Deregulation in Gas Electricity and Gas Retail Prices Introduction Disaggregation of Prices in Ireland Supplier Prices in Ireland Analysis of Average Electricity and Gas Prices Summary - Prices Customer Protection, Debt and Disconnections Introduction Debt Flagging Pay as You Go Meters PAYG

7 7.4 Disconnections for Non-Payment of Account Disconnections Total Disconnections Electricity Market Disconnections Gas Market Summary - Customer Debt and Disconnections Conclusion & Next Steps Conclusion Market Monitoring Next steps

8 1.0 Introduction 1.1 The Commission for Energy Regulation The Commission for Energy Regulation (CER) is Ireland s independent energy and water regulator. The CER was established in 1999 and now has a wide range of economic, customer protection and safety responsibilities in energy. The CER is also the regulator of Ireland s public water and wastewater system. The CER s primary economic responsibilities in energy cover electricity generation, electricity and gas networks, and electricity and gas supply activities. As part of its role, the CER jointly regulates the all-island wholesale Single Electricity Market (SEM) with the Utility Regulator in Belfast. The SEM is governed by a decisionmaking body known as the SEM Committee, consisting of the CER, the Utility Regulator and an independent member. The overall aim of the CER s economic role is to protect the interests of energy customers. The CER has an important related function in customer protection by resolving complaints that customers have with energy companies. The CER s core focus in safety is to protect lives and property across a range of areas in the energy sector. This includes safety regulation of electrical contractors, gas installers and gas pipelines. In addition the CER is the safety regulator of upstream petroleum safety extraction and exploration activities, including on-shore and off-shore gas and oil. In 2014 the CER was appointed as Ireland's economic regulator of the Irish public water and wastewater sector. Further information on the CER s role and relevant legislation can be found on the CER s website at Objective of Report The purpose of this paper is to provide industry and interested stakeholders with relevant information on the developments of competition in the electricity and gas retail markets in the year 2013, with a particular focus on Q4. This report analyses trends in a number of key indicators: consumption, customer numbers, switching, pay-as-you-go meters, debt flagging, disconnections and prices. It also outlines the key developments in the market. The primary sources of data in this report are: Meter Registration System Operator (MRSO), ESB Networks and Gas Point Registration Operator (GPRO), Bord Gáis Networks (BGN). Published alongside this report is the 2014 Consumer Survey. The Annual Consumer Survey is an essential element of the CERs market monitoring activity and examines consumer s attitudes and experience in domestic and SME gas and electricity markets. The 2014 survey repeated the structure from surveys in 2011, 2012 and 2013 to facilitate trend analysis and included a number of new questions. Both reports are published simultaneously to provide a complete picture, qualitative and quantitative, of market activities. 8

9 2.0 Energy Market Structure and Developments 2.1 Introduction This section contains information on the structure of the electricity and gas retail markets. The main market segments and the suppliers operating in each are identified. The key market developments since market opening are outlined. 2.2 Active Suppliers and New Entrants There were 7 active suppliers in the electricity retail business and domestic markets 2 in There were 7 active suppliers in the gas retail business and domestic markets. In 2013 there were no new market entrants in the gas market and Pinergy entered the domestic electricity market in July In 2012, Airtricity acquired Phoenix and the customer base of Phoenix was transferred in early 2013 (some tables in this report contain references to Phoenix for comparison purposes). The main suppliers in the electricity and gas retail markets in 2013 are identified in the following table. Electricity Electricity Non- Gas Domestic Gas Non-Domestic Domestic Domestic Bord Gáis Energy Bord Gáis Energy Bord Gáis Energy Bord Gáis Energy Electric Ireland Electric Ireland Electric Ireland Electric Ireland Pinergy Energia Flogas Energia PrePayPower SSE Airtricity SSE Airtricity Flogas SSE Airtricity Vayu Gazprom SSE Airtricity Vayu Table 2.1 Suppliers Serving the Retail Electricity and Gas Markets in 2013 In December 2013, the Irish Government announced the sale of Bord Gáis Energy. The sale to a consortium comprised of Centrica, Brookfield Renewable Power and icon Infrastructure will see Bord Gáis Energy being broken into three separate units. Centrica will operate the Retail business unit in Ireland. 2.3 Market Developments The following table outlines the key developments in the electricity and gas retail markets over time, including some more recent developments in Airtricity, Bord Gáis Energy, Electric Ireland, Energia, Pinergy, Pre Pay Power and Vayu. 9

10 Year Electricity Gas 2005 February: Full market opening. Open to competition Single Electricity Market developed. July: Full market opening. Open to competition Airtricity enters domestic electricity market February: Bord Gáis Energy enters domestic electricity market October: Business market segments deregulated April: Domestic market segment deregulated October: Debt flagging process introduced. October: New PAYG meters for financial hardship introduced January: Prepaypower enters domestic market with supplier-led lifestyle choice prepayment model. March: First price comparison website, Bonkers, accredited by CER. July: Supplier Handbook published, outlining minimum service levels that suppliers must provide customers with. October: Harmonised retail systems between NI & RoI May: Second price comparison website, USwitch, accredited by CER. July: Pinergy enters domestic market with supplier-led lifestyle choice prepayment model January: Energia enters domestic electricity market. Flogas enters domestic gas market. PAYG meters for financial hardship & lifestyle choice introduced. May: Airtricity enters domestic gas market. April: Electric Ireland enters domestic gas market. October: Business market segments deregulated. October: Debt flagging process introduced. March: First price comparison website, Bonkers, accredited by CER. July: Supplier Handbook published, outlining minimum service levels that suppliers must provide customers with. October: Harmonised retail systems between NI & RoI. April: Decision on criteria for the deregulation of domestic gas. May: Second price comparison website, USwitch, accredited by CER. January: Energia enters domestic gas market. Table 2.2 Timeline of Key Retail Market Developments There were a number of developments during 2013 that have had positive implications on the level of competition and transparency in the electricity and gas markets. In electricity the market for supplier-led lifestyle choice prepayment where the customer pays for a prepayment device that is installed by the supplier expanded with the entry of Pinergy into the market 3. This development increases the choice 3 PrePayPower also operate in this space. 10

11 that is available to customers and has a positive knock-on effect on competition in the market. In May 2013, a second price comparison website 4 was accredited by the CER which increases clarity and transparency in relation to prices for domestic customers. In 2013, the CER published a decision on the criteria to be met for the deregulation of the domestic gas market which has paved the way for deregulation to occur. In December 2013, the CER published a consultation, Market Monitoring in the Electricity and Gas Retail Markets, which outlines a proposed new market monitoring framework. The new framework identifies all the indicators that the CER proposes to collect from networks and suppliers in order to comply with the EU 3 rd package and so that the CER has effective oversight of the retail markets to ensure that competition continues to develop and that customers are protected

12 3.0 Market Share Consumption & Customer Numbers 3.1 Introduction This section contains market share data for the main electricity and gas suppliers in Ireland. Data is presented in terms of actual customer numbers and consumption (MWhs/GWhs) for Q as well as showing the change in percentage share since the same quarter in the previous year. 3.2 Electricity Market The electricity market is comprised of four different market segments covering different DUoS groups (distribution use of system groups or DGs) 5 : Domestic market this covers the residential/household end of the market and is measured by DG 1 urban residential customers and DG 2 rural residential customers that have a connection to the low voltage network. Small-sized business market measured by DG 5 with a connection to a low voltage non-maximum demand Medium-sized business market measured by DG3 and 4 (unmetered public lighting & other unmetered connections) and DG6 (low voltage maximum demand) Large energy users (LEU) market measured by DG7 (medium voltage), DG8 (38kV), DG9 (38kV), DG10 (110kV network) and TCON (those connected to the electricity transmission system). The electricity market comprises some very large players and some very small players. Those that have at least a 1% MWh share are reported separately in a specific market. It is worth noting that, in electricity, the others category in some segments includes data on some suppliers that are not necessarily active in the electricity retail market, i.e. they are self-suppliers, or they only have very few sites. The activity of these companies generally does not have a significant impact on the overall data. However, some suppliers not active in the retail market may have only one/two sites but may generate a relatively high proportion of MWhs within the Others category Overall Trends in Retail Electricity Overall, in the electricity market, total customer numbers in the full year 2013 were 2,233,370 and total consumption was 24,203,055 MWhs. This represented a decrease of -0.17% and an increase of +0.16% respectively compared to A DUoS charge is a fee that ESB Networks charges to electricity suppliers for use of the electricity distribution system. The amount of DUoS that ESBN charges a supplier for each customer depends on which DUoS Group a customer is classified as, which is based on several factors including the voltage a premises is connected at, the type of meter installed, or if electricity is exported. Source: ESB Networks. 12

13 Customer Numbers Electricity Market Q Q Q Q % change between 2012 and 2013 Domestic Market 2,019,512 2,019,579 2,019,553 2,020,065 2,020, % Small Business 189, , , , , % Medium Business 24,432 24,476 24,474 24,554 24, % LEU 1,661 1,669 1,760 1,689 1, % Total Market 2,235,118 2,234,267 2,234,228 2,233,370 2,233, % Table 3.1 Retail Electricity Market, Customer Numbers 2013 There was a consistent reduction in total customers in electricity in each quarter of These decreases were driven by declines in customers in the domestic and small business segments, of -0.07% and -1.39% respectively. Customer numbers increased between 2012 and 2013 in the medium and LEU market segments. Consumption, MWhs Electricity Market Q Q Q Q % change between 2012 and 2013 Domestic Market 2,428,895 1,991,367 1,799,164 2,286,318 8,505, % Small Business 994, , , ,524 3,650, % Medium Business 1,056, ,834 1,012,414 1,061,286 4,111, % LEU 1,923,921 1,965,854 2,043,644 2,001,982 7,935, % Total Market 6,403,354 5,809,317 5,679,274 6,311,110 24,203, % Table 3.2 Retail Electricity Market, Consumption (MWhs) 2013 Total consumption increased compared to 2012, driven by an increase in consumption in the LEU segment (somewhat explained by the increase in customers in the period). In the domestic market, consumption peaked in Q1 and was at its lowest in Q3. Forecast numbers for customers and consumption can be found in Appendix A. Figures for consumption (kwh) per customer are outlined in the following table: Domestic Market Urban Rural Consumption per customer, kwhs 2013 % change between 2012 and ,211 4,036 4, % -2.11% -1.90% Small Business 19, % Medium Business 167, % LEU 4,698, % Table 3.3 Retail Electricity Market, Consumption (kwhs) per Customer Domestic Electricity Market Overall, in the domestic electricity market, total customer numbers in Q were 2,020,065 and total consumption was 2,286,318 MWhs. These represented decreases of -0.07% and -3% respectively compared to the same period in Not seasonally adjusted. 13

14 The following table shows the breakdown of customer numbers and MWhs by supplier: Domestic Electricity Market Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 1,268,696 1,307, % 57.20% -1.74% -2.40% SSE Airtricity 373, , % 22.02% +0.44% +2.16% Bord Gáis Energy 295, , % 16.77% -1.61% -2.52% PrePayPower 67,061 70, % 3.10% na na Others 14,574 20, % 0.91% +2.91% +2.75% Total Domestic 2,020,065 2,286, % % Table 3.4 Domestic Electricity Retail Market Customer Nos. & MWhs, Q Table 3.4 and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2013 in the domestic sector. Electric Ireland retains the highest share of customers (62.8%) and MWhs (57.2%) in the domestic electricity market; however its share has declined compared to Q (and in comparison to Q3 2013). SSE Airtricity has the second highest share and its share has increased compared to Q However, SSE Airtricity has seen a decline in market share (in Q in comparison with Q3 2013). Bord Gáis Energy has experienced a decline in its market share of both customer numbers and MWhs since Q PrePayPower s share increased throughout % 3.32% 0.72% 16.77% 3.10% 0.91% Electric Ireland Airtricity Bord Gáis Energy 18.51% PrePayPower Others 22.02% 62.80% 57.20% Figure 3.1 Customer numbers share, domestic electricity market, Q Figure 3.2 Consumption (MWhs) share, domestic electricity market, Q Figures 3.3 and 3.4 below show the domestic market share trends in terms of customer numbers and MWhs from Q to Q Since full deregulation, Electric Ireland s market share of customer numbers has remained relatively stable. Over the same period Bord Gáis Energy s share has reduced. 7 In 2012 PrePayPower was not reported separately in the Retail Market Repots as it had a market share of MWhs of less than 1%. Therefore a comparison with 2012 is not included. In 2012, PrePayPower was included in the others category. The comparison of the others category includes the change in share of PrePayPower for both 2012 and

15 Figure 3.3 Domestic electricity customer number market share trend over time Figure 3.4 Domestic electricity consumption market share trend over time Small-Sized Business Electricity Market Overall, in the small-sized business electricity market, total customer numbers in Q were 187,062 and total consumption was 961,524 MWhs. This represented decreases of -1.4% and -0.8% respectively compared to the same period in The following table shows the breakdown of customer numbers and MWhs by supplier: Small Business Electricity Market Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 91, , % 36.85% +2.83% +5.80% SSE Airtricity 34, , % 19.53% -2.99% -4.17% Bord Gáis Energy 17,026 85, % 8.85% -0.22% -1.57% Energia 44, , % 34.35% +0.32% -0.13% Others 294 4, % 0.42% +0.06% +0.07% Total 187, , % 100% Table 3.5 Small-Sized Business Electricity Retail Market Customer Nos. & MWhs, Q Table 3.5 and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2013 in the small business market. Electric Ireland maintains the largest share of customers in the small business market, and now has the largest share of MWhs (Energia had the largest MWh share in Q4 2012). Electric Ireland has gained market share of customer numbers and MWhs compared to Q Energia has lost market share in MWhs while both SSE Airtricity and Bord Gáis Energy decreased customer number and MWhs market share since Q

16 9.10% 0.16% 8.85% 0.42% 18.29% 48.72% Electric Ireland 19.53% 36.85% Energia Airtricity Bord Gáis Energy Others 23.73% Figure 3.5 Customer numbers share, smallsized business electricity market, Q % Figure 3.6 Consumption (MWhs) share, smallsized business electricity market, Q Figures 3.7 and 3.8 below show the market share trend in terms of customer numbers and MWhs from Q to Q Since the business market was fully deregulated in October 2010, Energia has increased its share of customer numbers and MWh. Bord Gáis Energy continues to experience a decline in market share and registered decreases in both customer numbers and MWhs. The charts show that when the market was deregulated, Electric Ireland initially decreased market share but its share has increased over the past two years. Figure 3.7 Small business electricity customer number market share trend over time Figure 3.8 Small business electricity consumption market share trend over time Medium-Sized Business Electricity Market Overall, in the medium-sized business electricity market total customer numbers in Q were 24,554 and total consumption was 1,061,286 MWhs. These represented an increase of +0.7% in customers but a decline of -0.7% in MWhs compared to the same period in The following table shows the breakdown of customer numbers and MWhs by supplier: 16

17 Medium Business Electricity Market Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 14, , % 33.45% +4.66% +8.58% SSE Airtricity 2, , % 21.31% -4.29% -5.79% Bord Gáis Energy , % 7.54% -0.81% -0.73% Vayu , % 1.80% Na na Energia 5, , % 35.59% +0.49% -2.06% Others 34 3, % 0.31% 0% 0% Total 24,554 1,061, % 100% Tables 3.6 Medium-sized Business Electricity Retail Market Customer Nos. & MWhs, Q The table above and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of Electric Ireland continues to have the highest share of customer numbers and Energia the highest share of MWhs. Energia experienced a decline in share of MWhs compared to the same period in 2012 but more recently Energia s market share increased (between Q3 and Q4 2013). Electric Ireland experienced increases in share in both customers and MWhs compared to Q Both SSE Airtricity and Bord Gáis Energy s market shares of MWhs and customers declined since Q % 4.04% 0.14% 0.53% Electric Ireland 7.54% 1.80% 0.31% 33.45% Energia Airtricity 21.31% 22.98% 60.63% Bord Gáis Energy Vayu Others 35.59% Figure 3.9 Customer numbers share, mediumsized business electricity market, Q Figure 3.10 Consumption share, mediumsized business electricity market, Q Figures 3.11 and 3.12 below show the market share trend in terms of customer numbers and MWhs from Q to Q When the business market was fully deregulated in October 2010, Electric Ireland experienced declines in share of MWhs and customer numbers for a number of years. However, Electric Ireland s share increased throughout Bord Gáis Energy experienced declines in share over time, while SSE Airtricity s share increased in the first few years but has more recently declined. 17

18 Figure 3.11 Medium business electricity customer number market share trend over time Figure 3.12 Medium business electricity consumption market share trend over time Large Energy Users (LEUs) Overall, in the LEU electricity market total customer numbers in Q was 1,689 and total consumption was 2,001,982 MWhs. This represented increases of 1.5% and 4.3% respectively compared to Q The following table shows the breakdown of customer numbers and MWhs by supplier: LEU Electricity Market Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland , % 41.35% +2.69% +0.46% SSE Airtricity , % 22.11% -4.41% -0.31% Bord Gáis Energy , % 10.41% +0.16% +1.10% Energia , % 16.81% +1.54% -1.64% Vayu 73 63, % 3.19% -0.19% +0.52% Others , % 6.13% +0.20% -0.14% Total 1,689 2,001, % 100% Tables 3.7 LEU Electricity Retail Market Customer Nos. & MWhs, Q The table above and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of There are more suppliers active in the LEU market than any other electricity market segment. Electric Ireland continues to have the largest market share in both customers and MWhs and experienced an increase in share compared to Q Bord Gáis Energy also experienced a gain in share, while SSE Airtricity lost share since Q

19 9.53% 4.32% 2.37% 44.82% Electric Ireland Energia 10.41% 3.19% 6.13% 41.35% Airtricity 21.79% Bord Gáis Energy Vayu Others 22.11% 17.17% Figure 3.13 Customer numbers share, LEU market, Q % Figure 3.14 Consumption (MWhs) share, LEU market, Q Figures 3.15 and 3.16 below show the market share trends in terms of customer numbers and MWhs from Q to Q SSE Airtricity has experienced a large gain in share of MWhs and customers over time. Both Bord Gáis Energy and Energia experienced a loss in share of MWhs over time. Figure 3.15 LEU Customer number market share trend over time Figure 3.16 LEU Consumption market share trend over time 3.3 Gas Market The gas market is reported as four different market segments: Domestic market this represents non-daily metered (NDM) residential customers. Industrial and commercial (IC) market represents businesses with a supply point capacity of below 3,750kWh and consumption level below 73,000kWh. Fuel variation tariff (FVT) market NDM gas customers with a supply point capacity of above 3,750kWh and consumption level above 73,000kWh. Regulated tariff formula (RTF) market annual consumption of between 5.5GWhs and 264 GWhs. 19

20 This section contains the market share data for all gas suppliers. Data is presented in terms of actual customer numbers and consumption (GWhs) for Q as well as showing the change in percentage share since the previous quarter. The gas consumption (GWhs) figures used are cumulative figures from the beginning of Overall Trends in Retail Gas Overall, in the gas market, total customer numbers in the full year 2013 were 659,644 and total consumption was 17,523 GWhs. This represented increases of +0.6% and +0.8% respectively compared to Customer Numbers Gas Market Q Q Q Q % change between 2012 and 2013 Domestic Market 632, , , , , % IC 23,032 22,979 22,781 22,946 22, % FVT 1,757 1,766 1,770 1,757 1, % RTF % Total Gas Market 657, , , , , % Table 3.8 Retail Gas Market, Customer Numbers 2013 Total customers in gas increased between 2012 and The number of customers in all market segments increased in the same period with the highest rate of increase in the RTF market. Consumption increased by +0.8% between 2012 and 2013 with the highest percentage increase in the IC segment, of +1.55%. Forecasted consumption figures are in Appendix 2. Consumption, GWhs Gas Market 2013 % change between 2012 and 2013 Domestic Market 7, % IC 1, % FVT 2, % RTF 5, % Total Gas Market 17, % Table 3.9 Retail Gas Market, Consumption (GWhs) 2013 Data on consumption per customer is outlined in the table below. The data shows that consumption increased on a per customer basis in most segments, except the RTF segment. 20

21 Consumption per customer, kwhs 2013 % change between 2012 and 2013 Domestic Market 12, % IC 76, % FVT 1,279, % RTF 22,855, % Table 3.10 Retail Gas Market, Consumption (kwhs) per Customer Domestic Gas Market Overall, in the domestic gas market total customer numbers in Q were 634,692 and total consumption in 2013 was 7,818 GWhs. This represented an increase of +0.7% in customer numbers compared to Q4 2012, and a +0.96% increase in GWhs compared to The following table shows the breakdown of customer numbers and GWhs by supplier: Domestic Gas Market Bord Gáis Energy Actual figures Q Market share Q % change in market share between Q & Q Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs 363,002 4, % 60.41% -8.45% -7.86% SSE Airtricity 109,905 1, % 17.86% +0.18% -1.11% Electric Ireland 128,861 1, % 16.53% +7.92% +8.12% Flogas 32, % 5.19% +0.28% +0.84% Others % 0.01% +0.07% +0.01% Total Domestic 634,692 7, % 100% Table 3.11 Domestic Retail Gas Market, Market Shares, Q The table above and the figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of Bord Gáis Energy continues to have the largest market share in both customer numbers and consumption in the domestic market at 57.19% and 60.41% respectively. However, its share is declining with an 8.45% decline in customer numbers since Q Electric Ireland significantly increased its share of customer numbers and GWhs, as did Flogas but to a much lower extent. Electric Ireland now has the second highest share of customers in the market. 21

22 5.12% 0.07% 17.32% 5.19% 0.01% 17.86% 20.30% Airtricity 16.53% Bord Gáis Energy Electric Ireland Flogas Others 57.19% Figure 3.17 Customer Numbers, Domestic Gas Market, Q % Figure 3.18 Consumption, GWhs, Domestic Gas Market, Q Figures 3.19 and 3.20 below show the market share trends in terms of customer numbers and GWhs from Q to Q The charts show that there has been a significant change in Bord Gáis Energy s share over time and that market share across suppliers has become more distributed. Figure 3.19 Domestic Gas Customer number market share trend over time Figure 3.20 Domestic Gas Consumption market share trend over time Industrial and Commercial (IC) Gas Market Overall, in the IC gas market, total customer numbers in Q were 22,946 and total consumption was 1,766 GWhs. Customer numbers remained relatively constant compared to Q4 2012, and GWhs increased by +1.55% since The following table shows the breakdown of customer numbers and GWhs by supplier: 22

23 IC Gas Market Actual figures Q Market share Q % change in market share between Q & Q Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs Bord Gáis Energy 9, % 34.94% -4.82% -4.05% SSE Airtricity 1, % 8.72% +3.37% +4.35% Electric Ireland 1, % 3.40% +3.96% +2.30% Flogas 5, % 30.86% -0.19% +0.33% Energia 3, % 18.40% -1.57% -2.76% Vayu % 3.68% -0.73% -0.11% Total IC 22,946 1, % 100% Table 3.12 IC Retail Gas Market, Market Shares, Q The table above and figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of Bord Gáis Energy has the highest share of GWhs and customers in the IC market, however, its share is decreasing (with a decline of 4.82% in customers compared to Q4 2012). Energia also saw its share of customers and GWhs decline between Q and Q Electric Ireland and SSE Airtricity both have experienced increases in shares of customer numbers and GWhs since Q % 1.73% 8.66% Airtricity 18.40% 3.68% 8.72% Bord Gáis Energy Electric Ireland Flogas 34.94% 25.46% Energia 6.87% 41.70% Vayu 30.86% 3.40% Figure 3.21 Customer Numbers, IC Gas Market, Q Figure 3.22 Consumption, GWhs, IC Gas Market, Q Figures 3.23 and 3.24 below show the market share trends in terms of customer numbers and GWhs from Q to Q Market shares have changed significantly over time, with Flogas gaining considerably and Bord Gáis Energy continuing to lose share. 23

24 Figure 3.23 IC Gas Customer number market share trend over time Figure 3.24 IC Gas Consumption market share trend over time Fuel Variation Tariff (FVT) Gas Market 8 Overall, in the FVT gas market, total customer numbers in Q were 1,757 and total consumption was 2,248 GWhs. This represented an increase of +0.4% in customer numbers compared to Q4 2012, and a +0.45% increase in GWhs since The following table shows the breakdown of customer numbers and GWhs by supplier and the change in market share in the year since Q FVT Gas Market Bord Gáis Energy SSE Airtricity Actual figures Q Market share Q % change in market share between Q & Q Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs % 30.96% -2.98% -4.07% % 8.27% % +5.91% Flogas % 25.62% +1.68% +2.52% Energia % 16.50% -7.25% +0.15% Vayu % 18.46% -5.49% -4.51% Others % 0.18% +0.34% 0.00% Total FVT 1,757 2, % 100% Table 3.13 FVT Retail Gas Market, Market Shares, Q The table above and figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of Bord Gáis Energy has the highest share of customer numbers and GWhs in the FVT market. Similar to the IC and domestic markets, Bord Gáis Energy s share has declined since Q Energia experienced the largest decline across suppliers in share of customers since Q with Vayu also experiencing a decline in customer numbers. All other suppliers increased their market shares, with a significant increase by SSE Airtricity in terms of customers. 8 There are no longer regulated business tariffs; however, the reporting structure has been maintained for consistency and to allow for comparison. 24

25 12.52% 15.71% 0.74% 16.33% Airtricity Bord Gáis Energy Flogas 18.46% 0.18% 8.27% 30.96% Energia Vayu Others 16.50% 24.02% 30.68% Figure 3.25 Customer Numbers, FVT Gas Market Segment, Q % Figure 3.26 Consumption, GWhs, FVT Gas Market Segment, Q Figures 3.27 and 3.28 below show the market share trends in terms of customer numbers and GWhs from Q to Q Bord Gáis Energy s market share has declined significantly and market share has become more distributed over time. Figure 3.27 FVT Gas Customer number market share trend over time Figure 3.28 FVT Gas Consumption market share trend over time Regulated Tariff Formula (RTF) 9 Overall, in the RTF gas market, total customer numbers in Q was 249 and total consumption was 5,691 GWhs. This represented an increase of over +1.2% in customer numbers compared to Q4 2012, and a +0.51% increase in GWhs since The following table shows the breakdown of customer numbers and GWhs by supplier and in percentage change in market share in the year since Q There are no longer regulated business tariffs, however, the reporting structure has been maintained for consistency and to allow for comparison. 25

26 RTF Gas Market Actual figures Q Market share Q % change in market share between Q & Q Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs Bord Gáis Energy 52 1, % 17.62% +1.37% -3.46% SSE Airtricity % 15.38% +6.31% +9.16% Electric Ireland % 5.11% +2.76% +2.18% Gazprom 13 1, % 19.33% -0.47% -0.05% Energia 75 1, % 22.74% +8.58% +2.07% Vayu 51 1, % 19.79% % +0.11% Other % 0.04% +0.40% +0.04% Total RTF 249 5, % 100% Table 3.14 RTF Retail Gas Market, Market Shares, Q The table above and figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of Energia now has the largest share of customers and GWhs in the RTF market. Electric Ireland, Bord Gáis Energy, SSE Airtricity 10 and Energia have all experienced increases in market share of customer numbers since Q (with Energia experiencing the highest increase in the year). The market shares of Gazprom and Vayu declined in the year. More recently SSE Airtricity and Energia both experienced declines in customer number market share (between Q3 and Q4 2013) % 30.12% 0.40% 5.22% 16.06% 6.83% 20.88% Airtricity Bord Gáis Energy Electric Ireland Gazprom Energia Vayu Other 19.79% 22.74% 0.04% 15.38% 17.62% 5.11% 19.33% Figure 3.29 Customer Numbers, RTF Gas Market Segment Q Figure 3.30 Consumption, GWhs, RTF Gas Market Segment Q Figures 3.31 and 3.32 below show the market share trends in terms of customer numbers and GWhs from Q to Q The figures show that the market shares have become more dispersed over time with more suppliers actively participating in the market. In 2013, the change in the dominant suppliers is indicative of an active, competitive market. 10 This is partly explained by its acquisition of Phoenix Energy in 2012 and the subsequent transfer of customers to SSE Airtricity 26

27 Figure 3.31 RTF Gas Customer number market share trend over time Figure 3.32 RTF Gas Consumption market share trend over time 3.4 Summary - Market Share In electricity, Electric Ireland continues to be the largest supplier in terms of customers across all segments and in terms of MWhs (except in the medium business market). Energia remains the largest supplier (in terms of MWhs) in the medium business market but is no longer the largest supplier in consumption terms in the small-business market. The domestic market share (MWhs) of Electric Ireland (57.2%) is under the threshold at which it was deregulated (60%). Electric Ireland is gaining across most electricity market segments except in the domestic market. Bord Gáis Energy is losing share across all segments, except the LEU market. SSE Airtricity is also losing market share except in the domestic market segment. In gas, Bord Gáis Energy remains the largest supplier in terms of customers and consumption in domestic, IC and FVT markets. In the RTF market Energia has the highest GWhs and customer number share. Bord Gáis Energy had a 57.19% share of the domestic gas market in Q Flogas continued to gain customer market share in the domestic and FVT gas markets, but lost share in the IC market. SSE Airtricity is increasing market share in terms of customers in all gas segments. Vayu has lost share in all the gas segments in which it operates and Energia in the IC and FVT segments. Bord Gáis Energy lost share in most segments, except in the RTF market compared to The CER will continue to monitor both markets to ensure that competition is growing and continues to be promoted. 27

28 4.0 Customer Switching and New Registrations 4.1 Introduction This section contains data on customer switching activity with a breakdown of supplier switches in the relevant markets. Data on new registrations is also examined. Registrations represent the total number of sites that were connected in a period 11. Switching refers to the action where a customer changes from one supplier to another. It is measured by the number of completed switches in a period (not the number of switching requests). There is a free and easy switching process in place in Ireland which facilitates customers that wish to switch their supplier. Switching information is critically important in monitoring the effectiveness of market opening, the level of customer engagement in the market and the choices available to customers. It is important to note that this data measures the total number of switches completed in a given period. It does not report separately the number of unique switches and the number of repeat switches. 4.2 Electricity Market Switching & New Registrations This section analyses the level and trend in switching and new registrations in the electricity market by supplier and customer category Total Switching The total number of switches completed in the electricity market in 2013 was 266,224. This represented an increase in the total number since 2012 of +5.6%. 86% of the total number of switches in 2013 were in the domestic market. Switching remained above the 20,000 level per month throughout 2013, with a dip in December (likely due to seasonal effects). 11 New registration data may include a small number of sites that were reconnected/ reregistered in addition to sites that are new to the system. Switching data does not include new registrations. 28

29 Figure 4.1 Total Switching in Electricity, January 2009-December 2013 The switching rate is measured by calculating the proportion of total customers that switched in the period. The average number of customers for the year is calculated from the quarterly customer numbers data. The average switching rate in electricity in 2013 was 11.92%, which represents a higher proportion to that in 2012 (which was 11.27%). This rate compares well internationally and is indicative of an active market. 12 Total Electricity Market Total number of switches 454, , , , ,224 Switching rate 20.5% 21.0% 15.1% 11.27% 11.92% Table 4.1 Total Switching in Electricity Switching by Customer Category The domestic market made up 86% of total switching in electricity in The figures below analyse the trend in switching across all market segments and show that the trend varies quite significantly across segments. In the domestic market, the number of switches per month in 2013 was slightly higher than in 2012 (which had the lowest level of switching since market opening). Figure 4.2 demonstrates how domestic switching peaked in the first six months of 2009 following the entry of Bord Gáis Energy and SSE Airtricity in the domestic market. Domestic electricity switching has been relatively stable since September In the small business market, the level of switching varied across the year with a peak in May but with a decline towards the end of the year. This decline in Q4 contrasted to the trend in the same period in 2012 and According to the VaasaETT description of levels of switching. 29

30 Figure 4.2 Domestic Electricity Switching Figure 4.3 Small Business Electricity Switching Switching in both the medium-sized business and LEU markets also varied across the year. In the medium-sized business market, switching in 2013 was the highest it has been since Switching in the business sectors is more volatile than in the domestic sector and this reflects seasonal and contractual influences. Contract renewal dates in the LEU sector generally take place around October and January and this explains some of the differences in levels across the year. 30

31 Figure 4.4 Medium Business Electricity Switching Figure 4.5 LEU Electricity Switching The average switching rates in the domestic, small business, medium business and LEU are 11.32%, 18.11%, 13.74% and 11.98% respectively. By international comparison, all of these rates are relatively high. In comparison to 2012, there was an increase in the switching rate in all segments except the LEU segment, where switching declined by -12%. Electricity by Segment Domestic Small Business Medium Business Total number of switches, ,544 34,114 3, % change in total switching % +2.3% +2.8% -12.1% Switching rate, % 18.11% 13.74% 11.98% Table 4.2 Switching in Electricity by Market Segment, 2013 LEU Net Switching by Supplier Net switching represents the net gain or loss in customer numbers experienced by supplier. It is estimated by the gain in customers less the loss in customers experienced by the supplier. The data shows that Bord Gáis Energy consistently experienced a net loss in customer numbers in 2013, correlating with the reduction in market share. However, in November 2013 it experienced its first net gain in customers since March Similar to 2012, while SSE Airtricity experienced an overall gain, it had a volatile year with large net gains experienced in early 2013 but net losses in the second half of the year. Electric Ireland experienced relatively large net losses every month (except January) and had the largest net losses of all suppliers in November and December. Given that the majority of switching is in the domestic market, this is consistent with the trend in Electric Ireland s customer numbers. The relatively large losses experienced by both SSE Airtricity and Electric Ireland towards the end of the year correlated with price increase announcements by each of these suppliers in Q PrePayPower consistently experienced the largest net gain per month throughout

32 Figure 4.6 Net Switching in Electricity by Supplier, January 2010-December 2013 The table below outlines the net switching levels across suppliers over time. Similar to 2012, Bord Gáis Energy again experienced the highest net loss in customers (of - 32,709 customers) in However, Electric Ireland s net loss was also significant at -31,175. PrePayPower experienced the largest net gain in 2013 of +47,558. Electricity Net Switching Electric Ireland Energia SSE Airtricity Bord Gáis Energy PrePayPower Others Q , ,668-9,797-5,291 Q ,899 1,463 5,557-11,163 8, Q , ,116-12,422 12,826 2,408 Q , ,199-8,544 15,642 3,229 Q ,582 1,987-6, ,816 2, , ,368-55,744-17, ,175 4,089 3,696-32,709 47,558 8,545 Table 4.3 Net Switching in Electricity by Supplier, Q Q New Registrations New registrations in electricity are situations where a customer has moved into a site (which has been de-energised for at least 3 months and has remained vacant during the three month period 13 ). New registrations in electricity increased by 4% since There were 14,938 new registrations in total in ESB Networks. Sites normally remained registered to a supplier for 3 months after they are deenergised. 32

33 Figure 4.7 New Electricity Registrations over time by supplier, January 2010-December 2013 Electric Ireland continues to be the supplier associated with the majority of new registrations in electricity. However, Electric Ireland s share of new registrations continued to decline in 2013 and was 84% of total registrations (compared to 87% in 2012). Electricity New Registrations Others PrePayPower Bord Gáis Energy SSE Airtricity Energia Electric Ireland Total Q ,166 Q ,175 3,694 Q ,110 3,675 Q ,585 4, , ,597 14,938 % share % % 5.57% 3.08% 87.38% 100% % share % 0.80% 4.93% 7.44% 2.34% 84.33% 100% Table 4.4 New Registrations in Electricity by Supplier, Q Q Gas Market Switching & New Registrations This section analyses the levels and trends in switching and new registrations across suppliers in the gas market, as well as providing information on switching by customer segment Total Switching The total number of switches completed in the gas market in 2013 was 117,002 which was the highest level of switching recorded in a full year in the gas market. This represented an increase in the total number compared to 2012 of +5.8%. 96% of the total number of switches in 2013 were in the domestic market. 33

34 Figure 4.8 Total Switching in Gas by Supplier, January 2010-December 2013 The switching rate is measured by calculating the proportion of total customers that switched in the period. The switching rate in gas in 2013 was 17.8%. This represented a higher proportion to that in 2012 (which had a rate of 16.97%). By international comparison the gas market is considered a very active market with regard to switching. Total Gas Market Total number of switches 93, , , ,002 Switching rate 14.54% 17.38% 16.97% 17.8% Table 4.5 Total Switching in Gas Switching by Customer Category The domestic market makes up 96% of total switching in gas. The figures below analyse the trend in switching across the domestic and IC gas market segments. The trend varies quite significantly across segments. In the domestic market, the total number of switches in 2013 was 112,216 and there was an overall downward trend in switching per month throughout the year. In the IC market, total switches were 4,786 and the level of switching varied significantly across the year. 34

35 Figure 4.9 Switching in the Domestic Gas Sector Figure 4.10 Switching in the IC Gas Sector The switching rate in the domestic market was 17.7% and in the IC market was over 20%. Total switching has increased in both market segments compared to Gas Market Segment Domestic IC Total number of switches, ,216 4,786 % change in total switching % % Switching rate, % 20.9% Table 4.6 Switching in Gas by Market Segment in Net Switching by Supplier The data shows that, similar to the case in 2012 and the experience in electricity, Bord Gáis Energy consistently experienced a net loss in customer numbers in Electric Ireland has experienced a net gain since it entered the domestic market in March 2011 and it continued to experience significant net gains in gas throughout

36 Figure 4.11 Net Switching in Gas by Supplier, January 2010-December 2013 The table below outlines the net switching levels across suppliers over time. In 2013, Bord Gáis Energy experienced the highest net loss in customers (of 56,041 customers), higher than its net loss in Electric Ireland continued to experience the highest net gain (of 52,599 customers). Other suppliers had varied experiences throughout 2013, with SSE Airtricity, Flogas and Energia gaining and Vayu experiencing a net loss. SSE Airtricity Bord Gáis Energy Electric Ireland Energia Flogas Gazprom Phoenix 14 Q ,027-14,831 15, , Q ,301 13, Q ,505-16,199 15, Q ,911 12, Q ,630 10, ,270-47,524 50, , ,099-56,041 52, , Table 4.7 Net Switching in Gas by Supplier, Q Q Vayu New Registrations New gas registrations are defined by BGN as the situation where a new meter is fitted or a meter is unlocked at sites where there is no supplier registered 15. The 14 The customer portfolio of Phoenix transferred to Airtricity during A registration unlock is where the site has been locked for greater than 18 months and there has been no consumption since the lock was carried out and no customer registered. 36

37 figure below shows the trend in new registrations by supplier since January New registrations in gas have increased by +7% compared to There were 7,006 new registrations in total in Figure 4.12 New Registrations in Gas by Supplier, January 2010-December 2013 Bord Gáis Energy continues to be the supplier associated with the majority (67.6%) of new registrations in the gas market. However, Bord Gáis Energy s share of new registrations was 6.5% less than its share in Gas New Registrations SSE Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Total Q , ,400 Q ,438 Q , ,645 Q , , ,733 1, ,006 % share % 74.10% 9.34% 8.28% 1.13% 0.52% 100% % share % 67.56% 14.52% 8.38% 0.63% 0.26% % Table 4.8 New Registrations in Gas by Supplier, Q Q Summary Customer Switching Switching is continuing in both the electricity and gas markets and switching rates are above 10% in both markets. Under the VaasaETT description of the levels of switching, the Irish electricity market is considered a warm active market and switching activity is sufficient. The Irish gas market is considered a hot market. Ireland ranks very well globally in terms of switching rates. The total number of switches completed in the electricity market in 2013 was 266,224. This represented an increase in the total number since 2012 of +5.6%. The level of switching in electricity has been at a relatively stable level since September 37

38 2011. The total number of switches complete in the gas market in 2013 was 117,002. This represented an increase in the total number since 2012 of +5.8%. Switches in the domestic market made up 86% and 96% of total switching in electricity and gas respectively. PrePayPower experienced the highest net gain in customers in electricity in 2013 and Electric Ireland experienced the highest net gain in gas. Bord Gáis Energy experienced the highest net loss in both markets. 38

39 5.0 Competition and Deregulation 5.1 Introduction The CER is responsible for the promotion and monitoring of competition in the electricity and gas retail markets. The CER has overseen the liberalisation and the full market opening of both the electricity and gas markets. The introduction and growth in competition in both markets has reduced the necessity for the CER to regulate the prices of the incumbent suppliers in each market. For each market segment in electricity and gas the CER identified the various conditions that must be met in order for deregulation to take place. These conditions are measured using the metrics contained in retail market reports (market share and switching). With the continued development of competition, the only market yet to meet the criteria for deregulation (and will remain subject to regulation until 01 st July 2014) is the domestic NDM retail gas market. 5.2 Deregulation in Electricity All market segments in electricity are deregulated. Business markets were deregulated in October 2010 and the domestic market was deregulated in April The following were the criteria for deregulation in the domestic electricity market: At least 3 suppliers active in the market; A minimum of 2 independent suppliers, each of which has at least 10% share of load (GWhs) in the market; Switching rates greater than 10%; Deregulation at market share of 60% conditional on ESB removing the ESB brand. In Q4 2013, Electric Ireland s market share (MWh), at 57.2%, was still below the threshold of 60% which was set out in the electricity Roadmap. Electric Ireland s share of MWhs in the domestic market reduced in There continues to be two independent suppliers with over 10% market share which satisfies the market share criteria. The final condition set out was that domestic switching rates had to be above 10%. The rate in the domestic continues to meet this criterion. At 11.32% the switching rate in the domestic market remains above 10% and is higher than the rate in The CER commits to continue to monitor all electricity market segments and, as outlined in the NDM gas decision paper 16, should it feel that customers are not benefiting from deregulation of the sector, the CER will use its regulatory powers to intervene and improve matters. 16 CER/13/096, Review of the NDM Retail Gas Market. 39

40 5.3 Deregulation in Gas The gas business markets were fully deregulated in October The domestic NDM retail gas market remains regulated, however the CER has recently published a decision which states that the date for deregulation will be 01 st July A decision paper CER 13/096 NDM Retail Market Review was published in April This paper outlined the CER s decision with regard to the development of competition in the domestic retail gas market and identified the market share thresholds at which deregulation would occur: At least 3 suppliers, of which two are non-bord Gáis Energy suppliers; Each non-bord Gáis Energy supplier has a market share is in excess of 10%; Customer switching rates in excess of 10% per year; Threshold for deregulation is 60% (customers) with rebranding of its retail business and without rebranding the threshold is 55%. By the end of 2013, the domestic gas market had not met all the required criteria for deregulation as set out in NDM Review. Bord Gáis Energy s market share at 57.19% was above the required threshold of 55% without rebranding (defined in terms of customer numbers in the gas market 18 ). There are at least three active unrelated suppliers in the market, and three of these have a market share greater than 10%. The final condition set out was that the annual domestic switching rate is greater than 10%. At almost over 17% at the end of 2013 this was been met. The CER has issued monthly NDM Competition Reviews since May 2013 which contain forecasts of when the threshold might be met. The last review was issued in May 2014 and indicated that all criteria are forecast to be met during June On 30 th May 2014, the CER issued a decision to deregulate the domestic gas market on 1 st July The CER is continuing to monitor the development of competition in all gas markets. 17 CER/14/117 Domestic Gas Market Deregulation Decision. 18 The threshold is set at 60% with rebranding however the CER did not receive a decision on branding in 2013 and so worked on the basis that rebranding would not take place. 40

41 6.0 Electricity and Gas Retail Prices 6.1 Introduction Open and competitive energy markets will result in competitive energy prices. However, there are many factors to consider in analysing trends and levels of prices in Ireland. Specific market conditions may result in a large proportion of price changes to be outside of the control of (or external to) suppliers/other stakeholders in Ireland. Notwithstanding these external factors, it is important to ensure that prices are competitive and set in a transparent way for customers. This section outlines the components of end user price and identifies the recent trend in energy prices in Ireland. 6.2 Disaggregation of Prices in Ireland 19 Energy prices in Ireland are made up of a number of different components, each driven by differing factors. Prices are based on costs incurred by a supplier in serving its customer base. The following diagram indicates the key components that comprise retail energy prices in Ireland and the key external/internal factors that impact on each component: DRIVERS Cost of distribution and transmission DRIVERS costs faced by supplier in supplying energy: labour Profits Network costs Supply costs Irish Energy Prices DRIVERS Public service obligation Carbon tax VAT rate Government Policy Wholesale costs DRIVERS energy costs (including impact of exchange rates) capacity costs market operator cost Figure 6.1 Composition of Energy Prices It is important to note that each component affects prices to a different degree and the proportionate impact is not equal across factors. A significant factor affecting energy prices in Ireland is the change in global gas prices given Ireland s 19 Eurostat and SEAI. There is no data on the disaggregation of gas prices. 41

42 dependence on fossil fuels and the knock on impact that this has on energy prices in Ireland. The high reliance of Ireland on imported fossil fuels for electricity generation results in Ireland having a high exposure to currency fluctuations. Variations in global prices are outside the control of suppliers/other stakeholders in Ireland and result in Irish-based energy supply companies to develop hedging strategies that allow them to minimise the impact of sudden global energy price shifts. Of all the costs that are likely to comprise a final price, suppliers must charge their customers the PSO levy 20, carbon tax and VAT. They may, however, choose to either absorb or charge the remaining costs to their customers. Nonetheless, the final prices will be primarily influenced by energy costs, see below. Of the other charges there are a number of these which are regulated and approved annually (network charges, certain generation-related charges in electricity, PSO in electricity). These regulated costs are necessary in order for networks and other market operators to recoup the cost of generating, transmitting and distributing electricity, and suppliers are required to pay these annually. Changes to these charges generally come into effect on the 1 st October annually (electricity capacity charges are updated on 1 st January). While it is the decision of each supplier whether or not to pass through such costs to final customers, it is likely that most suppliers pass through all such costs. These costs, with the addition of the applicable taxes, are referred to as Pass Through Costs The CER has responsibility for regulating network prices in Ireland. The CER directs and carries out annual reviews of the charges for access to and use of the electricity and gas distribution systems. The CER also reviews the costs incurred by ESB and BGN/Gaslink in developing, maintaining and operating the system. These charges are ultimately passed onto customers. The CER in conjunction with the NIAUR (Northern Ireland Authority for Utility Regulation) 21 have jointly regulated the all-island wholesale electricity market, which is known as the SEM (Single Electricity Market), since The SEM includes a centralised gross pool (or spot) market which is fully liquid and electricity is bought and sold through a market clearing mechanism. Suppliers purchasing energy from the pool pay the system marginal price for each trading period. The RAs publish quarterly reports that show changes in fuel and carbon prices which provide transparency to the market. The following charts show the breakdown of average electricity prices into three components for the dominant domestic and IC consumption bands: energy and supply; network costs and taxes and levies. The data for Ireland is estimated on an annual basis and published by Eurostat. 20 The Public Service Obligation Levy (PSO) is charged on all electricity customers and designed to support the national policy objectives of security of supply, the use of indigenous fuels (i.e. peat) and the use of renewable energy sources in electricity generation 21 Together referred to as the Regulatory Authorities/RAs. 42

43 Figure 6.2 Disaggregated Domestic Electricity Price, Band DD, S Figure 6.3 Disaggregated Industrial & Commercial Electricity Price, Band IB, S Indicative data from Eurostat shows that energy and supply costs comprise a significant proportion of the average Irish domestic and non-domestic electricity price in comparison with other EU countries (of 51% for domestic and 67% for nondomestic prices). Taxes and levies in Ireland account for one of the smallest proportions of final price in the EU. 6.3 Supplier Prices in Ireland There are a large number of tariff plans available to domestic and business customers that are provided by electricity and gas suppliers in Ireland. These plans offer customers different tariffs comprised of standing and unit charges. Suppliers 22 Source: Eurostat. 23 Source: Eurostat. 43

44 can also offer different rates depending on payment or billing method (e.g. paperless, online, direct debit etc.). All suppliers are required to publish details of the tariff plans that are available to domestic customers. Suppliers of businesses often provide bespoke plans to their business customers and information on such plans is generally not published by suppliers. In 2013, three suppliers operate in both the electricity and gas market and two of these (SSE Airtricity and Electric Ireland) actively promote bundled dual fuel offers with price discounts for domestic customers that avail of both services from the same supplier. Such dual fuel offers had a significant impact on the market in late 2010 and in 2011; however, the proportion of customers purchasing electricity and gas services from the same supplier stabilised from late 2011 into 2012 and remained at just under 50% from January-September The electricity market in Ireland is fully deregulated, therefore the CER no longer regulates electricity prices in the domestic or business markets. In gas, all business market segments are deregulated; however the domestic NDM retail gas market was still subject to price controls in This means that the incumbent, Bord Gáis Energy had to apply to the CER if it was proposing to change domestic gas tariffs. In September 2013 the CER approved a 2.04% increase in the Bord Gáis Energy tariffs for its residential customers which took effect in October This increase was required due to increases in network tariffs since the previous year. Subsequent to the announcement of the Bord Gáis Energy gas tariff increase, all other suppliers increased gas prices in October With regard to electricity prices, towards the end of 2013 suppliers announced varied increases with various commencement dates. The following table outlines the price change announcements by each supplier over the past couple of years. These changes relate to the changes to the standard tariff of each supplier 26. Domestic price changes 2011/12 announced change 2012/13 announced change 2013/14 announced change Change Electricity Gas Electricity Gas Electricity Gas 27 SSE Airtricity % % +4.70% +8.50% +3.5% 28 +2% Bord Gáis Energy +12% % +4.80% +8.50% +2.2% % 30 Electric Ireland % % +5.90% +8.50% +1.7% 31 +2% Flogas Na % Na % Na +1.95% Pinergy Na Na Na Na +1.7% 32 Na PrePayPower Na Na Na Na +1.7% 33 Na Table 6.1 Supplier Domestic Price Change Announcements CER 12/164 Review of Non-Daily Metered Retail Gas Market. 25 CER 13/204 Gas Tariff Review Bord Gáis Energy s Residential Gas Customers 26 Discounted tariffs are generally presented as discounts off the standard tariff so any change to the standard plan will have a knock on impact on discounted plans. 27 All applied in October Applied in November Applied in March Increase due to wholesale price changes & weakened Euro. 30 Regulated price change. 31 Applied in January 2014 along with PSO increase resulting in +3.5% increase. 32 Tied to EI tariff. 33 Tied to EI tariff. 34 Source: supplier websites and price comparison websites. 44

45 Tables 6.2 and 6.3 identify the annual average bill per supplier (standard and discounted) in domestic electricity and gas in In order for a customer to accurately compare prices across suppliers, the comparison of the annual average bill (using average consumption values of 5,300kWhs in electricity and 13,800kWhs in gas) across suppliers is the best measure. Annual Average Electricity Bill, 2013 Supplier Standard Electricity Direct debit & online billing discount plan SSE Airtricity 1,188 1,049 Bord Gáis Energy 1,149 1,051 Electric Ireland 1,179 1,077 Pinergy 1, Na PrePayPower 1, Na Table 6.2 Annual Average Urban 24hr Domestic Electricity Bill per Supplier in 2013 (before end of the year price change announcements), including PSO and VAT and other supplier service charges as applicable Table 6.2 above shows that there was not a significant difference in the overall annual average electricity bill for customers on standard plans across suppliers, except in the case of suppliers offering lifestyle choice prepayment meters. Customers of such suppliers can pay over 11% more than credit customers. While this is the case, prepayment meters provide unquantifiable advantages to certain customers wishing to manage their energy use throughout the year. Customers also state that not receiving unexpected bills is an advantage of having a prepayment meter 37. Savings can be made by customers switching from a standard plan to a direct debt/online billing discounted plan. In gas, Flogas offered the cheapest tariffs to customers in Annual Average Gas Bill, 2013 Supplier Standard Gas Direct debit & online billing discount plan SSE Airtricity Bord Gáis Energy 961 Na Electric Ireland Flogas Table 6.3 Annual Average Domestic Gas Bill per Supplier in 2013 (before October 2013 announcements), including Carbon Tax and VAT Price comparison websites are useful tools for customers to compare prices across suppliers. CER has an accreditation framework which reviews the energy price comparison service provided by websites and only accredits if the site meets defined standards for accuracy, transparency and reliability. Ireland s second price comparison website was accredited in 2013: (accredited in May 35 Includes additional daily supplier prepayment service charge. 36 Includes additional daily supplier prepayment service charge. 37 Consumer Survey

46 2013). In addition the CER undertook an audit of the Bonkers.ie price comparison website in Analysis of Average Electricity and Gas Prices The following outlines published SEAI data on average energy prices in Ireland 38, and S data is taken from the Eurostat website. Trends in S2 (July-December) This section examines the current level and trend in energy prices in Ireland and in comparison with EU prices. Data is currently reported by SEAI 40 twice yearly and latest data (July-December 2013, S2 2013) is examined here. The SEAI is responsible for collecting, collating and reporting data on prices on Ireland s behalf. Figure 6.4 Irish Domestic Electricity Prices Relative to EU Average, including all taxes (market share of band) Domestic electricity prices are above the EU average in most consumption bands (except band DE). Average price has increased in all consumption bands since S (and, while higher than the EU average, average price for consumption bands DD and DE in Ireland are less than the Euro area averages). 38 SEAI, Electricity and Gas Prices in Ireland 1 st Semester (January-June) This section references SEAI data and extracted the S data from the Eurostat website. 40 Sustainable Energy Authority of Ireland (SEAI). 46

47 Figure 6.5 Irish Business Electricity Prices Relative to EU Average, excluding VAT (market share of band) In S the price of business electricity in Ireland for the band which accounts for the highest consumption (band IB with a 33.7% consumption share) on average was 16.03/kWh 41. Electricity prices for businesses in the dominant band have declined since the previous semester. The average price for band IA (the smallest business band) is now currently lower than the EU and Euro area averages. While prices in all other business consumption bands are currently above the EU average, Irish business electricity prices have become more favourable in comparison with the EU since S Figure 6.6 Irish Domestic Gas Prices Relative to EU Average, including all taxes (market share of band) In S the price of domestic gas in Ireland for the band which accounts for the highest consumption (band D2 with a 93.6% consumption share) on average was 7.2c/kWh, all taxes included. Gas prices in the domestic sector are now above the EU average (except for band D1); but remain below the Euro area average price. 41 VAT excluded. 47

48 Figure 6.7 Irish Business Gas Prices Relative to EU Average, excluding VAT (market share of band) In terms of Irish business gas prices, prices in all consumption bands are above the EU average. Business gas prices have increased since the last semester. 6.5 Summary - Prices Energy prices are made up of a number of different components network costs, wholesale costs, supply and retail costs and other factors that are driven by Government policy such as PSO levy, VAT rate and carbon tax. Energy and supply costs comprise a large proportion of final price in Ireland in comparison to other EU countries. It is likely that a significant share of this is accounted for by fossil fuel costs. All suppliers are required to publish details of the tariff plans that are available to domestic customers. In 2013 Ireland s second price comparison website was accredited and one such website was audited. These developments serve to provide customers with more clarity and transparency in relation to prices and ease of comparison across suppliers. On average, latest data shows that Irish electricity and gas prices are above the EU area average and increases were experienced in most bands except the dominant business electricity consumption band. Domestic price increases were introduced by all gas suppliers in October and electricity suppliers increased domestic prices in late 2013 or early The decision paper on a new market monitoring framework that is to be published in 2014 will identify how the CER proposes to monitor supplier s energy prices as part of its overall retail market monitoring activity. 48

49 7.0 Customer Protection, Debt and Disconnections 7.1 Introduction It is the CER s statutory obligation to ensure a high standard of protection for final customers in the electricity and gas markets. In compliance with the Code of Practice on Disconnections, suppliers must ensure that disconnection is always the last resort. The Supplier Handbook sets out the minimum service levels that electricity and gas suppliers must provide to their customers; including in the areas of disconnections and PAYG meters. In dealing with customers that are in arrears, suppliers must take a number of steps prior to disconnecting a property. The disconnection of a customer s energy supply should always be the last resort and all suppliers are required to offer a payment plan and a PAYG to customers in arrears in advance of proceeding to disconnect. Suppliers must also facilitate a customer that wishes to nominate a third party to represent them. 42 This section outlines the trends in debt flagging, PAYG installs and disconnections in Debt Flagging Debt flagging was introduced in light of on-going concerns from energy suppliers and consumer organisations that in the current economic climate, customer and industry debt levels are being exacerbated by some customers changing supplier in order to avoid paying their arrears or to avoid disconnection. This practice of debt hopping is considered to raise costs for energy suppliers, and consequently for all consumers, and further compounds an individual s debt situation making it more difficult to manage in the long run. Where a customer requests to change to a new supplier, the customer s existing supplier has the facility to inform the new supplier if the customer has an outstanding debt, above the industry thresholds approved by the CER 43. The new supplier can then choose whether to proceed with or to cancel the change of supplier (CoS) request where this flag has been raised. The debt flagging process has been in place since October 2011 and the CER monitors the use of the debt flagging facility by both losing and gaining suppliers on an on-going basis. The table below shows the number of debt flagged change of supplier requests that were raised in the electricity market in There were 6,348 debt flags raised on change of supplier requests in the electricity market in 2013 (33.7% more than in 2012), corresponding on average to 2.32% of all change of supplier requests. Approximately 18.8% of debt flagged change of supplier requests were cancelled by the new supplier in 2013 which is significantly less than the proportion cancelled in 2012 (45%). 42 e.g. money advisor including MABS, a recognised charity or Social Welfare Representative. 43 Thresholds as outlined in the Debt Flagging Industry Code CER 11/181: domestic debt value of greater than or equal to 250 for > 60 days from due; small business value of greater or equal to 750 for > 30 days from due; medium-sized businesses debt value of greater than 1,500 for > 30 days due. The debt flagging process does not apply to LEUs. 49

50 Electricity Debt Flags Total Debt Flags Debt Flagged CoS requests as % Total CoS 44 % of Debt Flagged CoS Requests Cancelled by New Supplier Jan % 29.36% Feb % 22.19% Mar % 19.35% Apr % 23.06% May % 23.39% Jun % 22.98% Jul % 19.02% Aug % 15.10% Sept % 10.94% Oct % 14.92% Nov % 16.70% Dec % 17.79% ,348 Average 2.32% 18.81% Table 7.1 Debt Flagging in Electricity, January 2013-December 2013 The table below shows the total number of debt flags raised in the gas market in There were 1,293 debt flags raised in the gas market in 2013 (corresponding to 1.11% of completed gas switches) which represented an increase of 55% compared to 2012). Over 56% of gas debt flagged CoS requests were cancelled by the new supplier in Gas Debt Flags Total Debt Flags Debt Flagged CoS requests as % Total CoS 45 % of Debt Flagged CoS Requests Cancelled by New Supplier Jan % 63.46% Feb % 55.32% Mar % 60.00% Apr % 67.78% May % 66.44% Jun % 75.52% Jul % 60.47% Aug % 50.99% Sept % 44.83% Oct % 47.50% Nov % 37.38% Dec % 33.80% , % 56.15% Table 7.2 Debt Flagging in Gas, January 2013-December 2013 CER reviewed the monetary thresholds in debt flagging during The thresholds for debt flagging were subsequently reduced to the following from 1 st July 2013: 44 This data is based on the number of debt flags raised as a proportion of switching requests. 45 This data is based on the number of debt flags raised as a proportion of completed switches. 46 CER13/135 Debt Flagging Review. 50

51 Market Sector Debt Flagging Threshold Domestic 225 for > 60 days from due Small Business & Unmetered Supply 600 for > 30 days from due Medium Sized Business 1,200 for > 30 days from due Table 7.3 Debt Flagging Thresholds from 1 st July 2013 The CER will review these thresholds again during Pay as You Go Meters PAYG This section looks at the trend in the installation of PAYG meters. The requirements set out in the Codes of Practice ensure that fair and robust customer processes are in place. Suppliers are required to offer customers in financial hardship a PAYG meter in the domestic electricity and gas markets prior to taking steps to disconnect. The CER has been working with industry to facilitate the rollout of electricity and gas PAYG meters free of charge for customers experiencing financial hardship. Currently Electric Ireland, Bord Gáis Energy and SSE Airtricity provide PAYG meters in the electricity and gas domestic markets. Other suppliers in the prepayment area are PrePayPower and Pinergy who offer lifestyle choice prepayment options in the electricity sector. However the model offered by these suppliers is different as they provide the PAYG unit directly to the customer so that it acts as a budget controller in series with the existing meter. In addition, the models provided by such suppliers require customers to pay additional daily service charges (that customers in difficulty availing of free PAYG do not incur). ESB Networks and BGN are responsible for installing PAYG meters for customers in financial difficulty at the request of suppliers (on foot of a customer agreeing to the installation of a meter). The table below shows that there were 26,591 electricity PAYG meters installed in 2013 (with 6,629 installed in Q4). This represents a 80.7% increase in the number of PAYG meters installed when compared to Installs of PAYG Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Cumulative total Electricity 2,485 3,596 4,384 4,248 5,303 7,323 7,336 6,629 57,117 Gas 47 3,276 3,491 3,431 2,532 4,369 6,680 4,192 3,278 84,305 Table 7.4 PAYG Meter Installations Electricity and Gas, Q Q In gas there were 18,519 prepayment meters installed in 2013 which represented a 45.5% increase compared to the number installed in Of these, 83.9% were installed for reasons of financial hardship. Some 3,278 prepayment meters were installed in Q4 2013, of which 73.5% were installed for financial hardship reasons. This proportion represents a reduction on the percentage that were installed for financial hardship in the previous quarter (84%). Similar to the situation in 2012, the 47 Includes financial hardship and lifestyle choice PAYG meters fitted by BGN at the request of gas suppliers. Customer pay over 110 for a lifestyle gas meter. 51

52 number that was installed for financial hardship in gas declined in the second half of The following chart shows the trend per quarter in the number of PAYG meters installed for financial hardship reasons. Figure 7.1 Electricity & Gas Financial Hardship PAYG Meters installed, Q Q Figure 7.1 shows that in electricity the number of PAYG installations was steadily growing on a monthly basis with a dip in December. In gas the number of prepayment meters installed at the end of 2013 was slightly higher than the numbers installed in the same period With regard to the number of PAYG installs per supplier, the following tables show the installation rate per supplier (measured by the number of installs divided by the number of customers. Electricity Rate Electric Ireland Bord Gáis Energy SSE Airtricity Q % 0.36% 0.49% Q % 0.56% 0.47% Table 7.5 Electricity PAYG installation rate compared to customer base, Q3-Q In electricity, Bord Gáis Energy had the highest installation rate in Q while SSE Airtricity had the highest rate in the previous quarter. Gas Rate Electric Ireland Bord Gáis Energy SSE Airtricity Flogas Q % 0.35% 0.65% 0.67% Table 7.6 Gas PAYG installation rate (financial hardship) compared to customer base, Q In gas, Flogas had the highest installation rate in Q4 2013, followed closely by SSE Airtricity. Flogas commenced the installation of gas PAYG meters in November Prior to this customers in financial hardship that agreed to the installation of a PAYG were put on a waiting list. 48 Data is unavailable on the number of gas PAYG installs per supplier prior to Q

53 The CER continues to work with industry to promote the rollout of PAYG and customer education on the benefits of PAYG meters for managing payments and arrears. 7.4 Disconnections for Non-Payment of Account The disconnection/deenergisations of a customer s energy supply should always be the last resort and all suppliers are required to offer a payment plan and prepayment solution to customers in advance of proceeding to disconnect. This section analyses trends in disconnections in both electricity and gas Disconnections Total Disconnections of customers for non-payment of account declined in 2013 compared to 2012 by 29% in electricity and 17% in gas. Total Disconnections Electricity 17,794 17,441 12,391 Gas 4,560 7,558 6,279 Table 7.7 Total (domestic & business) Electricity & Gas NPA Disconnections, This decline can be partly explained by the increase in the installation of PAYG meters for financial hardship. In electricity there was a large increase in the number of PAYG meters installed and a decline in the number of disconnections. Figure 7.2 shows that there were a significantly higher number of PAYG meters being installed than there were disconnections. This clearly shows the effectiveness of the PAYG initiative. Figure 7.2 Domestic Electricity NPA Disconnections and Electricity PAYG Installs, Q4-11 to Q4-13 In gas, there are a higher number of PAYG meters being installed for reasons of financial hardship than disconnections. While this is the case, the difference is not as great as in electricity. A possible reason for this is that some customers may choose to disconnect gas at certain times during the year. 53

54 Figure 7.3 Domestic Gas NPA Disconnections and Gas PAYG Installs (financial hardship), Q to Q Anecdotal evidence suggests that a significant number of disconnected properties are in fact vacant. This section examines proxy data on the level of vacant premises in electricity and gas. Electricity Each month the CER receives proxy data on vacant premises from ESBN. This data provides an estimate of the number of reenergised 49 sites within five weeks of disconnection. Those sites that remain disconnected are assumed to be vacant. Figure 7.4 shows the trend in disconnections and shows the impact of adjusting the number of disconnections with installed PAYG meters and also taking out the impact of vacant premises. The chart clearly indicates that without a PAYG system, disconnections would be significantly higher. In addition, it can be seen that when proxy figures for vacant sites are removed, disconnections are significantly less. On average, in % of disconnected domestic sites in the electricity market were reconnected/ reenergised within five weeks of date of disconnection and over 40% remain disconnected. It is assumed that these sites are vacant. Figure 7.4 Domestic Disconnections in Electricity adjusting for PAYG & Vacant Premises Note: Caution must be taken in interpreting the vacant premises data as estimated figures are used. 49 Sites may be reenergised with a different supplier. 54

55 Gas Figure 7.5 shows the trend in disconnections and shows the impact of adjusting the number of disconnections with installed PAYG meters and also taking out the impact of vacant premises. The chart indicates that without a PAYG system, disconnections would be higher. In addition, similar to the case in electricity it can be seen that when proxy figures for vacant sites are removed, disconnections are less. On average, over 35% of disconnected gas sites that were disconnected in the January to June period in 2013 remained disconnected in It is assumed that these sites are vacant. Figure 7.5 Domestic Disconnections in Gas adjusting for PAYG & Vacant Premises Note: Caution must be taken in interpreting the vacant premises data as estimated figures are used Disconnections Electricity Market CER receives data on electricity disconnections that were completed for nonpayment of account reasons on a monthly basis from ESBN 50. This section analyses the data on electricity non-payment of account (NPA) disconnections 51. Electricity disconnections have declined in the full year 2013 since 2012, by almost 30%. Electric Ireland continues to complete the majority of NPA disconnections; however, its NPA disconnections continue to decline. Domestic NPA disconnections made up a smaller proportion of the total NPA disconnections, 81.7% in 2013 compared to 84.0% in This data has been validated by suppliers in advance of publication. 51 NPA can cover customers in arrears that have been disconnected because they cannot pay due to financial hardship or disconnected customers who choose not to pay debt. Currently such customers cannot be distinguished in the data. This NPA data does not include data on self-disconnections or disconnections for reasons other than debt. 55

56 Electricity Total Disconnections Electric Ireland SSE Airtricity Bord Gáis Energy Energia Total % Of total that are in the domestic market Q ,658 1, , % Q ,248 1, , % Q ,971 1, , % Q , , % Q , , % Q , , % Q ,732 1, , % Q , , % % Change Q Q % % % % % ,197 6,110 3, , % ,844 3,635 2, , % % Change % -40.5% -32.5% -13.5% -29.0% Table 7.8 Total Electricity Disconnections by Supplier, Q Q Domestic NPA disconnections (table below) have decreased in 2013 compared to the full year 2012, by 30.91%. All suppliers reduced the number of domestic disconnections in the period by between 19% and 34%. Electricity Domestic Electric SSE Bord Gáis Total Disconnection Ireland Airtricity Energy Domestic Q ,326 1,158 4,177 Q ,073 1, ,963 Q ,707 1, ,496 Q , ,012 Q ,016 Q ,312 Q , ,020 Q , ,774 % Change Q Q % % % % ,336 5,378 2,934 14, ,072 3,111 1,939 10,122 % Change % % % % Table 7.9 Domestic Electricity Disconnections by Supplier 52, Q Q A more relevant measure of comparing disconnection levels between suppliers is their disconnection rate per 10,000 customers. This takes into account the customer numbers of the suppliers and is an accurate measure of disconnection intensity by supplier. The data reveals that all suppliers now have relatively similar rates of 52 Lifestyle prepayment suppliers are not included in the data as given the nature of prepayment meters; customers are less likely to accumulate debt with such suppliers. 56

57 disconnection. Electric Ireland had the highest disconnection rate in Q The disconnection rate of all suppliers reduced compared to Q Electricity Domestic Disconnection Rate Electric Ireland SSE Airtricity Bord Gáis Energy Q Q Q Q Q Q Q Q % Change Q % -40.0% -11.5% Figure 7.6 & Table 7.10 Domestic Electricity Disconnections per 10,000 Customers, Q Q4-13 Suppliers have provided various reasons for the trend in disconnections. Bord Gáis Energy has attributed the decline in its disconnections in Q4 to the mild weather which resulted in a lack of arrears accumulating for customers. While Electric Ireland notes that approximately 40% of its disconnection properties are deemed to be vacant, it has given the following reasons to explain the trend in its disconnections: continued efforts to reduce the level of disconnections; a significant number of electricity PAYG meters have been installed since the commencement of the rollout of this technology in Q4 2011; over 200,000 payment plans have been agreed in total with its customers in arrears. SSE Airtricity has stated that the reduction in disconnections is due to the availability and acceptance of PAYG meters by customers. SSE Airtricity considers that PAYG meters are beneficial in avoiding disconnection and are attributed to a direct reduction in SSE Airtricity s electricity disconnection figures. 57

58 7.4.3 Disconnections Gas Market There are three types of disconnections in gas: credit locks, disconnect meters (DMs) and street isolations (CTSRs) 53. This section only focuses on disconnections that were undertaken for NPA reasons. In 2013, total disconnections (domestic and non-domestic) in gas were 6,279, and were up to 17% lower than the number in There were decreases in disconnections of customers of Bord Gáis Energy, Flogas and Energia in the period. However, disconnections of customers of SSE Airtricity and Electric Ireland increased in the full year 2013 compared to Bord Gáis Energy Total % Of total that are in the domestic market SSE Electric Total Gas Airtricity Flogas Energia Ireland Q , , % Q , , % Q , , % Q % Q % Q , , % Q , , % Q % % Change Q Q % -18.4% -51.9% -53.8% % -3.9% ,503 1, , % ,053 1, , % % Change % +13.6% -10.9% -7.5% % -16.9% Table 7.11 Total Gas Disconnections by Supplier, Q Q Domestic gas NPA disconnections made up over 93% of total disconnections in 2013, and declined by up 15.8% compared to 2012 (see table 7.12). Increases were experienced by SSE Airtricity and Electric Ireland. Bord Gáis Energy and Flogas reduced domestic disconnections. 53 The CER receives separate data reports on all three from Bord Gáis Networks. To determine the disconnections that were completed for non-payment of account reasons (NPA), the CER assumes all credit locks were completed for NPA reasons and sends each supplier the GPRNs that relate to their DMs and CTSRs so that the supplier can identify the remaining NPA disconnections. The CER then add together all the CLs and the NPA identified DMs and CTSRs to derive an estimate for total gas NPA disconnections. 58

59 Domestic Gas Disconnections Bord Gáis Energy SSE Airtricity Flogas Electric Ireland Total Domestic Q , ,542 Q , ,187 Q , ,374 Q Q Q , ,038 Q , ,203 Q % Change Q Q % -17.8% -50.5% % -1.4% ,079 1, , ,819 1, ,895 % Change % +13.4% -14.7% % -15.8% Table 7.12 Domestic Gas Disconnections by supplier, Q Q In analysing the disconnection levels of suppliers, it is important to examine disconnections as a proportion of customer numbers to determine the intensity of disconnections by supplier. While Bord Gáis Energy completed over 74% of all domestic disconnections (in 2013), it did not have the highest rate of disconnection in Q While Flogas had the highest rate of domestic disconnections per 10,000 customers for the first three quarters in 2013, it had the second lowest rate in Q SSE Airtricity had the highest disconnection rate in Q and Electric Ireland continued to have the lowest rate (Electric Ireland also had the lowest PAYG installation rate). 59

60 Domestic Gas Disconnection Rate Bord Gáis Energy SSE Airtricity Flogas Electric Ireland Q Q Q Q Q Q Q Q % Change Q Q % % % % Figure 7.7 & Table 7.13 Domestic Gas Disconnections per 10,000 Customers, Q Q In general terms it is considered that the increase in the acceptance and in the installation of PAYG meters has contributed to a decline in gas disconnections. The installation of PAYG meters for Flogas customers commenced in November Prior to this, any customer that accepted a PAYG meter was put on an installation waiting list and were not disconnected for non-payment. While the actual level of Electric Ireland gas disconnections is low, Electric Ireland previously attributed the increase in disconnections to the date of its market entry in the domestic gas market, the subsequent increase in customer numbers and the fact that relatively new customers who are in difficulty are only reaching the disconnection stage now. Bord Gáis Energy had previously stated that the decline in its gas disconnections can somewhat be attributed to the decline in its customer numbers. Similar to Electric Ireland, SSE Airtricity attributed the increase in disconnections to the date of its market entry in the domestic gas market. As such there has been a lag in customers building up arrears and SSE Airtricity state that as a result there would be a slight increase in disconnections. However, SSE Airtricity has stated that it has also seen success in gas with the availability of PAYG meters and suggests that disconnections would have been higher if the meters had not been available. 7.5 Summary - Customer Debt and Disconnections Debt flagging has been in operation in the retail market since October In % of switches in the electricity markets were debt flagged, while 1.1% of switches were debt flagged in the gas markets. PAYG meters continue to be installed and there were higher numbers of PAYG meters installed in 2013 in both electricity and gas compared to Electricity and gas disconnections for non-payment of account are monitored on an ongoing basis by CER. Total disconnections in 2013 were 12,391 in electricity and 6,279 in gas. Estimated data shows that over 40% of the domestic sites in electricity that were disconnected were vacant and 35% in gas. Total electricity and gas disconnections have declined since There were declines in the number of domestic disconnections in both electricity and gas, with reductions in electricity disconnections across all suppliers compared to The decline in electricity 60

61 disconnections can be partly explained by the increase in the number PAYG meters installed for customers in arrears compared to In gas, suppliers had varying experiences with both SSE Airtricity and Electric Ireland recording increases in domestic disconnections compared to Both suppliers attribute the increase in disconnections to the date of their respective market entry in the domestic gas market, the subsequent increase in customer numbers and the fact that relatively new customers who are in difficulty are only reaching the disconnection stage now. A number of actions have been taken to ensure that disconnections continue to be minimised. Suppliers can only pass on 50% of the charge for a disconnection or reconnection for reason of non-payment to a customer experiencing financial hardship. There continues to be stringent obligations on suppliers to make disconnections the last resort. In November 2013 the CER published an audit 54 of supplier s compliance with the code of practice on domestic disconnections. The audit found that suppliers are adhering to the minimum standards as set out in the Supplier Handbook. In addition, the CER has committed to publishing monthly disconnection reports which will monitor, on a more regular basis, the trends in domestic disconnections at a supplier level. The CER continues to engage with stakeholders to ensure that the measures currently in place continue to support customers in genuine difficulty. 54 CER 13/248, Audit of Compliance with the Code of Practice on Disconnections for the Domestic Market, 11 November

62 8.0 Conclusion & Next Steps 8.1 Conclusion Competition continued to develop in the electricity and gas retail markets in Pinergy entered the domestic electricity market and the CER published a decision on the criteria for the deregulation of the domestic gas market. In electricity, Electric Ireland is the largest supplier in terms of MWhs in the domestic, small business and LEU markets, and Energia is largest in the medium business category. The domestic market share of Electric Ireland was 57.2% in Q4 and has declined by 2.4% since Q The domestic gas market is the only market segment still subject to price regulation. By the end of 2013, the domestic gas market had not met all the required criteria for deregulation as set out in NDM Review. Bord Gáis Energy s market share at 57.19% was above the threshold of 55% without rebranding. The annual switching rate (at 17%) was well above the 10% switching condition. A decision paper CER/14/117 NDM Domestic Gas Market Deregulation Decision was published in May 2014 which outlined the CER s decision with regard to the deregulation of the domestic retail gas market. The domestic gas market will be deregulated on 01 st July The CER continues to monitor the gas and electricity markets and should it feel that customers are not benefiting from deregulation of the sector; the CER will use its regulatory powers to intervene and improve matters. Switching is continuing in both the electricity and gas markets and switching rates are above 10% in both markets. Increases in switching were experienced in both electricity and gas between 2012 and 2013 which is indicative of an increasing level of customer engagement. The level of switching in electricity continued to be around the 20,000 mark per month. The experience at supplier level varied for some suppliers compared to Electric Ireland experienced a large net loss in electricity (but had experienced the largest net gain in 2012). However, Electric Ireland continued to experience the highest net gain in gas. PrePayPower had the highest net gain in electricity. Bord Gáis Energy continued to experience the highest net loss in both markets. SSE Airtricity experienced a net gain in customers in gas and also gained in electricity (but not to the same extent as in 2012). Flogas gained customers in gas in Given the importance of adequate rates of switching in sustaining competitive energy markets, the CER will continue to publish monthly switching reports to assess the trends and the level of customer engagement in the electricity and gas markets. There was a higher number of PAYG meters installed in electricity and gas compared to Gas and electricity domestic disconnections for NPA declined in The installation of PAYG meters for customers in difficulty is having an impact on the overall disconnection levels. The CER continues to promote the early intervention by suppliers to encourage customer engagement and uptake of payment plans and PAYG meters and to continue to ensure that the disconnection of a customer is treated as a last resort. The CER will work with suppliers to determine what further actions can be taken to limit the level of disconnections and increase the uptake of PAYG meters. 62

63 In relation to energy prices, all suppliers are required to publish details of the tariff plans that are available to domestic customers. In 2013, Ireland s second price comparison website was accredited, and another was successfully audited. These developments serve to provide customers with more clarity and transparency in relation to energy prices. On average, latest data shows that Irish gas and electricity prices are above the EU average. Domestic gas and electricity prices increased across suppliers in late 2013 or early Market Monitoring Next steps Next Retail Market Report The CER will continue to monitor the electricity and gas retail markets throughout The next retail markets report will cover Q Reporting Period Publication date Q August 2014 Q November 2014 Q February 2015 Q May 2015 Monthly market monitoring reports on switching and on domestic disconnections will continue to be published. Market Monitoring Framework Consultation The CER published a consultation paper on a new market monitoring framework in December This paper outlined the CER s proposals in relation to the indicators to be collected from stakeholders as part of a new market monitoring framework. The CER will publish a decision and work will commence on implementation during Debt Management Consultation In May 2014 the CER published a consultation paper, Debt Management Debt Transfer & Debt Flagging (CER/14/119). This paper seeks comment on proposed changes to industry systems/processes to facilitate the repayment of debt by PAYG customers in arrears after a change of supplier and it also seeks comment on the current debt flagging thresholds. 63

64 Appendix A Electricity Market Data Tables Groups Type DG1 Urban Domestic 857, , , , ,811 1,054,865 1,262,034 1,332,956 1,367,757 1,382,608 1,388,249 1,388,130 1,386,836 1,385,768 DG2 Rural Domestic 603, , , , , , , , , , , , , ,306 DG3+DG4 Public Light, Misc 4,492 4,883 5,322 5,681 6,175 6,662 6,487 9,147 10,004 10,437 10,908 11,194 11,383 11,626 DG5 LV Non MD 154, , , , , , , , , , , , , ,066 DG6 LV MD 8,019 8,687 8,472 8,289 8,682 9,903 11,098 12,221 13,226 13,416 13,303 13,175 13,007 12,929 DG7 MV ,056 1,203 1,271 1,349 1,413 1,444 1,468 1,491 1,502 1,523 DG8 38kV Looped DG9 38kV Tailed DG10 110kV Network DG1-2 Total Domestic 1,460,606 1,510,095 1,564,001 1,629,346 1,704,572 1,786,113 1,870,576 1,943,643 1,989,456 2,011,558 2,019,965 2,022,806 2,021,455 2,020,074 DG3-6 Total LV Non Dom 167, , , , , , , , , , , , , ,621 DG7-10 Total MV & HV ,038 1,094 1,263 1,339 1,420 1,494 1,525 1,551 1,583 1,598 1,621 Total 1,628,835 1,684,095 1,741,836 1,810,341 1,892,522 1,979,934 2,070,380 2,151,286 2,203,724 2,227,521 2,237,232 2,239,507 2,237,130 2,233,316 Table A1 Distribution Customer Numbers, electricity Group Type DG1 Urban Domestic 3, , , , , , , , , , , , , , ,582 DG2 Rural Domestic 2, , , , , , , , , , , , , , ,908 DG3+DG4 Public Light, Misc DG5 LV Non MD 2, , , , , , , , , , , , , , ,625 DG6 LV Max Demand 2, , , , , , , , , , , , , , ,834 DG7 MV 3, , , , , , , , , , , , , , ,982 DG8+DG9 38kV DG10 110kV Network DG1-2 Total Domestic 6, , , , , , , , , , , , , , ,491 DG3-6 Total LV Non Dom 5, , , , , , , , , , , , , , ,736 DG7-10 Total MV & HV 4, , , , , , , , , , , , , , ,133 Total 16, , , , , , , , , , , , , , ,359 Table A2 Distribution Annual Sales GWhs (at customer meter point), electricity Source: ESB Networks. 64

65 Group Type DG1 Urban Domestic DG2 Rural Domestic DG3+DG 4 Public Light, Misc DG5 LV Non MD DG6 LV MD DG7 MV 4, , , , , , , , , , , , , , DG8+DG 9 38kV 18,899 19,971 20,519 21,261 21,459 13,732 13,049 12,181 10, , , , , , DG10 110kV Network 8, , , , , , , , , , , , DG1-2 Total Domestic Total LV Non DG3-6 Dom DG7-10 Total MV & HV 5, , , , , , , , , , , , , , Total Table A3 Distribution Annual Consumption, MWhs/ Customer (at customer meter point), electricity Group Type DG1 Urban Domestic 1,387,620 1,390,364 1,394,535 1,400,113 1,405,714 1,411,337 1,416,982 DG2 Rural Domestic 635, , , , , , ,594 DG3+DG4 Public Light, Misc 11,684 11,801 11,948 12,128 12,370 12,618 12,870 DG5 LV Non MD 188, , , , , , ,083 DG6 LV MD 12,994 13,124 13,288 13,487 13,757 14,032 14,312 DG7 MV 1,546 1,577 1,616 1,657 1,698 1,740 1,784 DG8 38kV Looped DG9 38kV Tailed DG10 110kV Network DG1-2 Total Domestic 2,022,774 2,026,774 2,032,854 2,040,986 2,049,150 2,057,346 2,065,576 DG3-6 Total LV Non Dom 212, , , , , , ,265 DG7-10 Total MV & HV 1,644 1,675 1,714 1,755 1,796 1,838 1,882 Total 2,022,774 2,026,774 2,032,854 2,040,986 2,049,150 2,057,346 2,065,576 Table A4 Distribution Customer Number Forecast Source: ESB Networks 65

66 Group Type DG1 24Hr 4,432 4,409 4,401 4,376 4,363 4,350 4,348 DG1 Dual Tariff - Day DG1 Dual Tariff - Night DG1 Urban Domestic 5,585 5,556 5,547 5,515 5,498 5,482 5,480 DG2 24Hr 2,296 2,284 2,280 2,267 2,260 2,254 2,253 DG2 Dual Tariff - Day DG2 Dual Tariff - Night DG2 Rural Domestic 2,909 2,894 2,890 2,873 2,864 2,856 2,855 DG3+DG4 Public Light, Misc DG5 24Hr 1,535 1,550 1,574 1,594 1,627 1,661 1,701 DG5 Dual Tariff - Day 1,338 1,351 1,372 1,389 1,418 1,448 1,482 DG5 Dual Tariff - Night DG5 LV Non MD 3,636 3,671 3,727 3,774 3,853 3,934 4,027 Day 2,769 2,796 2,839 2,874 2,935 2,996 3,067 Night 1,076 1,086 1,103 1,117 1,140 1,164 1,192 DG6 LV MD 3,845 3,882 3,942 3,991 4,075 4,160 4,259 Day 3,394 3,469 3,555 3,623 3,702 3,783 3,876 Night 1,676 1,713 1,755 1,789 1,828 1,868 1,914 DG7 MV 5,070 5,183 5,311 5,412 5,530 5,651 5,790 Day Night DG8 38kV Looped Day Night DG9 38kV Tailed Day Night DG10 110kV Network DG1-2 Total Domestic 8,494 8,450 8,436 8,388 8,363 8,337 8,335 Total LV Non DG3-6 Dom 7,758 7,834 7,953 8,053 8,222 8,394 8,593 DG7-10 Total MV & HV 6,241 6,380 6,537 6,662 6,807 6,956 7,128 Total Distribution 22,493 22,663 22,927 23,103 23,392 23,687 24,056 Table A5 Distribution Consumption Forecast , GWh Source: ESB Networks 66

67 Appendix B - Gas Market Data Tables Unit 2004/ / / / / / / / /13 Power GWh/y 25,630 29,775 34,688 37,758 36,007 39,338 35,432 29,864 27,627 I/C GWh/y 11,127 10,352 10,486 10,507 10,415 10,499 12,021 13,244 13,669 Domestic GWh/y 7,757 8,149 7,716 8,239 8,312 8,492 8,340 7,326 8,214 Total Irish GWh/y 44,514 48,276 52,890 56,504 54,734 58,239 55,726 50,435 49,510 Figure B1 Historic Irish Gas Demand 55 Unit 2013/ / / / / / / / /22 Power GWh/y 26,600 27,700 28,400 28,700 29,000 29,100 29,800 30,400 32,100 I/C GWh/y 13,700 15,200 15,400 15,500 15,700 15,800 16,000 16,000 16,100 Domestic GWh/y 7,300 7,200 7,200 7,100 7,100 7,000 6,900 6,900 6,800 Total Irish 68,500 71,400 72,000 72,600 73,300 70,700 71,300 72,200 74,100 GWh/y 56 Figure B2 Forecast Irish Gas Demand Gas demand is summarised by Gas Year, i.e. the period from 1 October to the following 30 September. 56 Discrepancies between the total and the sum of Power, I/C and Res can be attributed to own use. 57 Source: Gaslink, Network Development Plan