Electricity & Gas Retail Markets Annual Report 2014

Electricity & Gas Retail Markets Annual Report 2014 DOCUMENT TYPE: REFERENCE: Information Paper CER/15/15112 DATE PUBLISHED: June 2015 QUERIES TO: info@cer.ie The Commission for Energy Regulation, The Exchange, Belgard Square North, Tallaght, Dublin 24. www.cer.ie

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 2014, with a particular focus on Q4 2014. The following sets out some of the key messages contained in this report. Key Messages: There was a new market entrant in the domestic sector in Q1 2014 (Energia up to 3.2% market share by Q4). Electric Ireland retains the largest domestic electricity market share (by customer numbers and MWhs), though below threshold at which it was deregulated. Market shares in the business sectors for both electricity and gas have become more dispersed over time. While Electric Ireland s market share increased in all business segments in 2014, it is still below the price deregulation threshold 1. There has been a growth in pre-pay options in electricity with both financial hardship and lifestyle choice meters being offered. Market entry of lifestyle choice prepayment providers PrePayPower and Pinergy was in 2012 and 2013 respectively. In 2014, EI began offering a pre-payment option also (as did SSE before subsequently exiting the segment). The Domestic gas sector was price deregulated in July 2014. All segments of the electricity and gas markets are now deregulated which means all suppliers are free to set their own prices. Electricity and gas markets maintained high levels of customer switching at an average rate of 14% and 17% respectively. The electricity switching rate was higher than in 2013. Group switching schemes were observed for the first time in 2014, with One Big Switch offering customers a discounted Bord Gáis Energy tariff. New product and pricing options were introduced in 2014, including cashback, fixed price plans, etc. This suggests that competition intensified in the domestic markets in 2014. Following a reduction in wholesale energy prices, Electric Ireland introduced a reduction of 2% in its domestic retail tariffs in November 2014; other suppliers followed in early 2015. Maximum savings available of 313 were available for customers switching from the standard dual fuel tariff to a discounted tariff 2. At the end of 2014, it was cheaper for a typical customer on a discounted plan to purchase gas and electricity from separate suppliers rather than avail of a dual fuel offer from one supplier. A moratorium on disconnections was in place from the beginning of 2014 until 20 th February 2014. This was followed by the introduction of an industry 1 60% market share (MWhs) with rebranding. 2 Excluding limited term offers and cashbacks. 2

voluntary code on disconnections which saw most suppliers committing to never disconnecting an engaging customer. Overall, the rate of disconnections in 2014 was 32% lower than in 2013, with a rate of 8.9 disconnections per 10,000 domestic customers in electricity and 10.4 per 10,000 in gas in Q4 2014. The CER considers that competition is continuing to develop in electricity and gas markets, and that energy customers have a range of choices in terms of supplier, payment options and price plans. The CER will continue to monitor the electricity and gas retail markets throughout 2015 to ensure that competition develops and final customers benefit. The CER published a decision paper on a new market monitoring framework in July 2014. The CER is in the process of implementing this new framework and data on new indicators may be published in upcoming quarterly retail reports. During 2015 the CER will also continue to monitor and to enforce supplier compliance with the minimum service requirements set out in the Supplier Handbook. Related to this, the CER will undertake a review of the Supplier Handbook to ensure that it meets the needs of customers. This review will take into account the findings of the Consumer Survey 2015, that has been published alongside this report, and the findings of the CER s audit of suppliers compliance with the code of practice on disconnections and marketing and signup that was undertaken in 2014 3. 3 CER/15/087, Audit of Compliance with the Code of Practice on Disconnections and Code of Practice on Marketing and Sign Up for the Domestic Sector. 3

Table of Contents 1.0 Introduction... 6 1.1 The Commission for Energy Regulation... 6 1.2 Objective of Report... 6 2.0 Energy Market Structure and Developments... 7 2.1 Introduction... 7 2.2 Active Suppliers and New Entrants... 7 2.3 Market Developments... 8 3.0 Market Share Consumption & Customer Numbers... 10 3.1 Introduction... 10 3.2 Electricity Market... 10 3.2.1 Overall Trends in Retail Electricity... 10 3.2.2 Domestic Electricity Market... 12 3.2.3 Small-Sized Business Electricity Market... 13 3.2.4 Medium-Sized Business Electricity Market... 15 3.2.5 Large Energy Users (LEUs)... 17 3.3 Gas Market... 19 3.3.1 Overall Trends in Retail Gas... 19 3.3.2 Domestic Gas Market... 20 3.3.3 Industrial and Commercial (IC) Gas Market... 22 3.3.4 Fuel Variation Tariff (FVT) Gas Market... 24 3.3.5 Regulated Tariff Formula (RTF)... 25 3.4 Summary - Market Share... 27 4.0 Customer Switching and New Registrations... 29 4.1 Introduction... 29 4.2 Electricity Market Switching & New Registrations... 29 4.2.1 Total Switching... 29 4.2.2 Switching by Customer Category... 30 4.2.3 Net Switching by Supplier... 32 4.2.4 New Registrations... 32 4.3 Gas Market Switching & New Registrations... 33 4.3.1 Total Switching... 34 4.3.2 Switching by Customer Category... 34 4.3.3 Net Switching by Supplier... 35 4.3.4 New Registrations... 36 4.4 Summary Customer Switching... 37 5.0 Competition and Price Deregulation... 39 5.1 Introduction... 39 5.2 Price Deregulation in Electricity... 39 5.3 Price Deregulation in Gas... 39 5.4 Summary... 40 6.0 Electricity and Gas Retail Prices... 41 6.1 Introduction... 41 6.2 Disaggregation of Prices in Ireland... 41 6.3 Supplier Prices in Ireland... 43 6.4 Analysis of Average Electricity and Gas Prices... 47 6.5 Summary - Prices... 49 7.0 Customer Protection, Debt and Disconnections... 50 7.1 Introduction... 50 4

7.2 Debt Flagging... 50 7.3 Pay as You Go Meters PAYG... 52 7.4 Disconnections for Non-Payment of Account... 54 7.4.1 Disconnections Total... 54 7.4.2 Disconnections Vacant premises proxy... 56 7.4.3 Disconnections Electricity Market... 57 7.4.4 Disconnections Gas Market... 59 7.5 Summary - Customer Debt and Disconnections... 61 8.0 Conclusion & Next Steps... 63 8.1 Conclusion... 63 8.2 Market Monitoring Next steps... 64 Appendix A Electricity Market Data Tables... 65 Appendix B - Gas Market Data Tables... 68 5

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 www.cer.ie. 1.2 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 2014, 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), Gas Networks Ireland (GNI). Published alongside this report is the 2015 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 2015 survey repeated the structure from surveys in 2011 to 2014 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. 6

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 4 in 2014. There were 7 active suppliers in the gas retail business and domestic markets 5. In 2014, Energia entered the domestic electricity and gas markets. The main suppliers in the electricity and gas retail markets in 2014 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 Energia Energia Energia Energia Pinergy SSE Airtricity Flogas Flogas PrePayPower Vayu SSE Airtricity Gazprom SSE Airtricity SSE Airtricity Vayu Table 2.1 Suppliers Serving the Retail Electricity and Gas Markets in 2014 4 SSE Airtricity, Bord Gáis Energy, Electric Ireland, Energia, Pinergy, Pre Pay Power and Vayu. 5 SSE Airtricity, Bord Gáis Energy, Electric Ireland, Energia, Flogas, Gazprom and Vayu. 7

2.3 Market Developments The following table outlines some the key developments in the electricity and gas retail markets over time. Year Electricity Gas 2005 February: Full market opening. Open to competition. 2007 Single Electricity Market developed. July: Full market opening. Open to competition. 2008 Airtricity enters domestic electricity market. 2009 February: Bord Gáis Energy enters domestic electricity market. 2010 October: Business market segments deregulated. 2011 April: Domestic market segment deregulated October: Debt flagging process introduced. October: New PAYG meters for financial hardship introduced. 2012 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. 2013 May: Second price comparison website, USwitch 6, accredited by CER. July: Pinergy enters domestic market with supplier-led lifestyle choice prepayment model. 2014 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. July: BGE price deregulated in the domestic market. Table 2.2 Timeline of Key Retail Market Developments 2005-2014 There were a number of developments during 2014 that have had positive implications on the level of competition and transparency in the electricity and gas markets. 6 Reaccredited as Switcher.ie in 2015. 8

In July 2014, CER made a decision to remove price regulation in the domestic gas market. This meant that since July, Bord Gáis Energy has been free to set its own prices in the domestic market. All other suppliers continue to set their own prices. All energy markets are now price deregulated in Ireland. 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 Electric Ireland now offering such a product 7. This development increases the choice that is available to customers and has a positive knock-on effect on competition in the market. In July 2014, the CER published a decision, Market Monitoring in the Electricity and Gas Retail Markets, which outlines the CER s decision on a new market monitoring framework. The new framework identifies all the indicators that the CER will 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. 7 PrePayPower and Pinergy also operate in this space. 9

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 Q4 2014 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) 8 : 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. 3.2.1 Overall Trends in Retail Electricity Overall, in the electricity market, total customer numbers in the full year 2014 was 2,236,317 and total consumption was 24,135,358 MWhs. This represented an increase of +0.1% and a decrease of -0.3% respectively compared to 2013. 8 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. 10

Customer Numbers Electricity Market Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 % change between 2013 and 2014 Domestic Market 2,020,089 2,021,536 2,022,796 2,024,382 2,024,382 +0.2% Small Business 186,492 185,953 185,657 185,481 185,481-0.8% Medium Business 24,541 24,595 24,686 24,742 24,742 +0.8% LEU 1,691 1,708 1,706 1,712 1,712 +1.4% Total Market 2,232,813 2,233,792 2,234,845 2,236,317 2,236,317 +0.1% Table 3.1 Retail Electricity Market, Customer Numbers 2014 There was a consistent increase in total customers in electricity in each quarter of 2014. These increases were driven by increases in customers in the domestic, medium business and LEU segments, of +0.2%, +0.8% and +1.4% respectively. Customer numbers declined between 2013 and 2014 in the small business market segment. Consumption, MWhs Electricity Market Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 % change between 2013 and 2014 Domestic Market 2,371,148 1,890,753 1,777,161 2,222,735 8,261,797-2.9% Small Business 993,851 834,905 810,856 950,658 3,590,270-1.6% Medium Business 1,040,214 970,463 995,492 1,054,762 4,060,931-1.2% LEU 1,947,762 2,032,347 2,119,677 2,122,574 8,222,360 +3.6% Total Market 6,352,975 5,728,468 5,703,186 6,350,729 24,135,358-0.3% Table 3.2 Retail Electricity Market, Consumption (MWhs) 2014 Total consumption declined compared to 2013, driven by decreases in consumption in the domestic, small business and medium business segments. 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 actual consumption (kwh) per customer are outlined in the following table: Domestic Market Urban Rural Actual Consumption per customer, kwhs 2014 % change between 2013 and 2014 9 4,081 3,904 4,469-3.08% -3.27% -2.67% Small Business 19,357-0.81% Medium Business 164,131-1.98% LEU 4,802,780 +2.22% Table 3.3 Retail Electricity Market, Consumption (kwhs) per Customer 2014 9 Not seasonally adjusted. 11

3.2.2 Domestic Electricity Market Overall, in the domestic electricity market, total customer numbers in Q4 2014 was 2,024,382 and total consumption was 2,222,735 MWhs. These represented an increase of +0.2% and a decline of -2.8% respectively compared to the same period in 2013. The following table shows the breakdown of customer numbers and MWhs by supplier: Domestic Electricity Market Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 1,248,194 1,251,644 61.66% 56.31% -1.15% -0.89% SSE Airtricity 338,596 432,301 16.73% 19.45% -1.78% -2.57% Bord Gáis Energy 277,197 348,400 13.69% 15.67% -0.96% -1.10% PrePayPower 94,693 102,927 4.68% 4.63% +1.36% +1.53% Energia 49,284 71,138 2.43% 3.20% - - Others 16,418 16,326 0.81% 0.73% - - Total Domestic 2,024,382 2,222,735 100% 100% Table 3.4 Domestic Electricity Retail Market Customer Nos. & MWhs, Q4 2014 10 Table 3.4 and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2014 in the domestic sector. Electric Ireland retains the highest share of customers (61.66%) and MWhs (56.31%) in the domestic electricity market; however its share has declined compared to Q4 2013. SSE Airtricity continues to have the second highest share but its share has also declined compared to Q4 2013 (-2.57% in terms of MWhs). Bord Gáis Energy has also experienced a decline in its market share of both customer numbers and MWhs since Q4 2013. PrePayPower s share increased in 2014 and new market entrant Energia now has a share of consumption of 3.2%. 4.68% 2.43% 0.81% 4.63% 3.20% 0.73% 13.69% Electric Ireland SSE Airtricity 15.67% Bord Gáis Energy PrePayPower Energia 16.73% 61.66% Others 19.45% 56.31% Figure 3.1 Customer numbers share, domestic electricity market, Q4 2014 Figure 3.2 Consumption (MWhs) share, domestic electricity market, Q4 2014 Figures 3.3 and 3.4 below show the domestic market share trends in terms of customer numbers and MWhs from Q1 2009 to Q4 2014. Since full deregulation, 10 In 2013 Energia was not reported separately in the Retail Market Repots as it was not operating in the domestic market and so had a market share of MWhs of less than 1%. Therefore a comparison with 2013 is not included. 12

Electric Ireland s market share of customer numbers has remained relatively stable. Over the same period Bord Gáis Energy s share has reduced. Figure 3.3 Domestic electricity customer number market share trend over time Figure 3.4 Domestic electricity consumption market share trend over time 3.2.3 Small-Sized Business Electricity Market Overall, in the small-sized business electricity market, total customer numbers in Q4 2014 was 185,481 and total consumption was 950,658 MWhs. These represented decreases of -0.8% and -1.1% respectively compared to the same period in 2013. The following table shows the breakdown of customer numbers and MWhs by supplier: Small Business Electricity Market Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 90,988 377,901 49.06% 39.75% +0.34% +2.90% SSE Airtricity 36,710 183,039 19.79% 19.25% +1.50% -0.27% Bord Gáis Energy 17,475 88,425 9.42% 9.30% +0.32% +0.45% Energia 39,848 295,333 21.48% 31.07% -2.25% -3.28% Others 460 5,959 0.25% 0.63% +0.09% +0.20% Total 185,481 950,658 100% 100% Table 3.5 Small-Sized Business Electricity Retail Market Customer Nos. & MWhs, Q4 2014 13

Table 3.5 and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2014 in the small business market. Electric Ireland maintains the largest share of customers and MWhs in the small business market (49.06% and 39.75% respectively). Electric Ireland has gained market share of customer numbers and MWhs compared to Q4 2013 (+0.34% and +2.9%). Energia continues to lose market share while Bord Gáis Energy increased customer number and MWhs market share since Q4 2013. 9.42% 0.25% 9.30% 0.63% Electric Ireland 19.79% Energia 19.25% 39.75% SSE Airtricity Bord Gáis Energy Others 49.06% 21.48% Figure 3.5 Customer numbers share, smallsized business electricity market, Q4 2014 31.07% Figure 3.6 Consumption (MWhs) share, smallsized business electricity market, Q4 2014 Figures 3.7 and 3.8 below show the market share trend in terms of customer numbers and MWhs from Q1 2009 to Q4 2014. Since the business market was fully deregulated in October 2010, Energia initially increased its share of customer numbers and MWh but experienced a decline more recently. The charts show that when the market was price 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 14

Figure 3.8 Small business electricity consumption market share trend over time 3.2.4 Medium-Sized Business Electricity Market Overall, in the medium-sized business electricity market total customer numbers in Q4 2014 was 24,742 and total consumption was 1,054,762 MWhs. These represented an increase of +0.8% in customers but a decline of -0.6% in MWhs compared to the same period in 2013. The following table shows the breakdown of customer numbers and MWhs by supplier: Medium Business Electricity Market Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 15,265 377,153 61.70% 35.76% +1.07% +2.31% SSE Airtricity 2,856 198,245 11.54% 18.80% -0.15% -2.52% Bord Gáis Energy 940 79,186 3.80% 7.51% -0.24% -0.03% Vayu 170 23,134 0.69% 2.19% +0.16% +0.40% Energia 5,475 374,111 22.13% 35.47% -0.85% -0.12% Others 36 2,932 0.15% 0.28% +0.01% -0.04% Total 24,742 1,054,762 100% 100% Tables 3.6 Medium-sized Business Electricity Retail Market Customer Nos. & MWhs, Q4 2014 The table above and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2014. Electric Ireland continues to have the highest share of customer numbers and now also has the highest share of MWhs (Energia had the highest MWhs share in Q4 2013). Energia experienced a decline in share of MWhs compared to the same period in 2013 (by -0.12%). Electric Ireland and Vayu experienced increases in share in both customers and MWhs compared to Q4 2013. Both SSE Airtricity and Bord Gáis Energy s market shares of MWhs and customers declined since Q4 2013. 15

11.54% 3.80% 0.15% 0.69% Electric Ireland Energia 18.80% 7.51% 2.19% 0.28% 35.76% SSE Airtricity 22.13% Bord Gáis Energy Vayu 61.70% Others 35.47% Figure 3.9 Customer numbers share, medium-sized business electricity market, Q4 2014 Figure 3.10 Consumption share, medium-sized business electricity market, Q4 2014 Figures 3.11 and 3.12 below show the market share trend in terms of customer numbers and MWhs from Q1 2009 to Q4 2014. When the business market was fully price 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 2013 and 2014 (but with a recent small decline between Q3 and Q4 2014). Bord Gáis Energy experienced declines in share over time, while SSE Airtricity s share increased in the first few years since price deregulation but declined in 2014. Figure 3.11 Medium business electricity customer number market share trend over time 16

Figure 3.12 Medium business electricity consumption market share trend over time 3.2.5 Large Energy Users (LEUs) Overall, in the LEU electricity market total customer numbers in Q4 2014 was 1,712 and total consumption was 2,122,574 MWhs. These represented increases of 1.4% and 6.0% respectively compared to Q4 2013. The following table shows the breakdown of customer numbers and MWhs by supplier: LEU Electricity Market Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 736 882,855 42.99% 41.59% -1.83% +0.24% SSE Airtricity 384 500,401 22.43% 23.58% +0.64% +1.47% Bord Gáis Energy 168 226,993 9.81% 10.69% +0.28% +0.28% Energia 314 342,713 18.34% 16.15% +1.17% -0.67% Vayu 88 67,347 5.14% 3.17% +0.82% -0.01% Others 22 102,266 1.29% 4.82% -1.08% -1.31% Total 1,712 2,122,574 100% 100% Tables 3.7 LEU Electricity Retail Market Customer Nos. & MWhs, Q4 2014 The table above and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2014. Market share is more diversified in the LEU market than any other electricity market segment. Nevertheless, Electric Ireland continues to have the largest market share in both customers and MWhs and experienced an increase in MWhs share compared to Q4 2013. Bord Gáis Energy and SSE Airtricity experienced gains in share, while Energia and Vayu lost market share of MWhs. 17

9.81% 5.14% 1.29% 42.99% Electric Ireland Energia 10.69% 3.17% 4.82% 41.59% SSE Airtricity Bord Gáis Energy 22.43% Vayu Others 23.58% 18.34% 16.15% Figure 3.13 Customer numbers share, LEU market, Q4 2014 Figure 3.14 Consumption (MWhs) share, LEU market, Q4 2014 Figures 3.15 and 3.16 below show the market share trends in terms of customer numbers and MWhs from Q1 2009 to Q4 2014. SSE Airtricity has experienced large gains in share of MWhs and customers over time. While Bord Gáis Energy has gained share recently, it has lost market share over time since 2009. Figure 3.15 LEU Customer number market share trend over time 18

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. This section contains the market share data for all gas suppliers. Data is presented in terms of actual customer numbers and consumption (GWhs) for Q4 2014 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 2014 and the data is statistically derived from NDM allocations data. 3.3.1 Overall Trends in Retail Gas Overall, in the gas market, total customer numbers were 665,187 and total consumption was 19,150 GWhs. This represented increases of +0.8% and +9% respectively compared to 2013. Customer Numbers Gas Market Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 % change between 2013 and 2014 Domestic Market 635,690 636,711 637,314 639,762 639,762 +0.8% IC 23,081 23,132 23,208 23,366 23,366 +1.8% FVT 1,762 1,771 1,767 1,814 1,814 +3.2% RTF 246 245 247 245 245-1.6% Total Gas Market 660,779 661,859 662,536 665,187 665,187 +0.8% Table 3.8 Retail Gas Market, Customer Numbers 2014 19

Total customers in gas increased between 2013 and 2014. The number of customers in most market segments increased in the same period, except in the RTF market. Consumption increased by +9% between 2013 and 2014 which is explained by a significant increase in RTF consumption, of +11.2%. Forecasted consumption figures are in Appendix 2. Consumption, GWhs Gas Market 2014 % change between 2013 and 2014 Domestic Market 6,900-11.7% IC 1,724-2.4% FVT 2,183-2.9% RTF 6,329 +11.2% Total Gas Market 19,150 +9% Table 3.9 Retail Gas Market, Consumption (GWhs) 2014 Data on actual consumption per customer is outlined in the table below. The data shows that consumption decreased on a per customer basis in most segments, except the RTF segment. Actual Consumption per customer, kwhs 2014 % change between 2013 and 2014 Domestic Market 10,785-12.4% IC 73,782-4.1% FVT 1,203,418-5.9% RTF 25,832,653 +13.0% Table 3.10 Retail Gas Market, Consumption (kwhs) per Customer 2014 3.3.2 Domestic Gas Market Overall, in the domestic gas market total customer numbers in Q4 2014 was 639,762 and total consumption in 2014 was 6,900 GWhs. These represented an increase of +0.8% in customer numbers compared to Q4 2013, and a -11.7% reduction in GWhs compared to 2013. The following table shows the breakdown of customer numbers and GWhs by supplier: Domestic Gas Market Bord Gáis Energy Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs 332,840 3,704 52.03% 53.68% -5.17% -6.73% SSE Airtricity 106,206 1,220 16.60% 17.68% -0.72% -0.18% Electric Ireland 145,225 1,482 22.70% 21.48% +2.40% +4.95% Flogas 30,954 372 4.84% 5.39% -0.28% +0.20% Energia 24,537 122 3.84% 1.77% Total Domestic 639,762 6,900 100% 100% Table 3.11 Domestic Retail Gas Market, Market Shares, Q4 2014 20

The table above and the figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of 2014. Bord Gáis Energy continues to have the largest market share in both customer numbers and consumption in the domestic market at 52.03% and 53.68% respectively. However, its share is declining with a 5.17% decline in customer numbers since Q4 2013. Electric Ireland continued to significantly increase its share of customer numbers and GWhs. Energia entered the domestic market in January 2014 and had a 3.84% market share in Q4 2014. SSE Airtricity lost market share since Q4 2013. 4.84% 3.84% 16.60% 5.39% 1.77% 17.68% 22.70% SSE Airtricity Bord Gáis Energy Electric Ireland Flogas Energia 21.48% 52.03% Figure 3.17 Customer Numbers, Domestic Gas Market, Q4 2014 53.68% Figure 3.18 Consumption, GWhs, Domestic Gas Market, Q4 2014 Figures 3.19 and 3.20 below show the market share trends in terms of customer numbers and GWhs from Q1 2009 to Q4 2014. 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 21

Figure 3.20 Domestic Gas Consumption market share trend over time 3.3.3 Industrial and Commercial (IC) Gas Market Overall, in the IC gas market, total customer numbers in Q4 2014 was 23,366 and total consumption was 1,724 GWhs. Customer numbers increased by +1.8% since 2013 and consumption declined by -2.4%. The following table shows the breakdown of customer numbers and GWhs by supplier: IC Gas Market Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs Bord Gáis Energy 9,078 531 38.85% 30.80% -2.85% -4.14% SSE Airtricity 2,188 215 9.36% 12.47% +0.70% +3.75% Electric Ireland 1,766 113 7.56% 6.55% +0.69% +3.16% Flogas 5,853 513 25.05% 29.76% -0.41% -1.10% Energia 4,092 297 17.51% 17.23% +1.94% -1.18% Vayu 389 55 1.66% 3.19% -0.07% -0.49% Total IC 23,366 1,724 100% 100% Table 3.12 IC Retail Gas Market, Market Shares, Q4 2014 The table above and figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of 2014. Bord Gáis Energy has the highest share of GWhs and customers in the IC market; however, its share continues to decrease (with a decline of 2.85% in customers compared to Q4 2013). Flogas is the second largest supplier in the domestic market with a 25% share of customers, however, its market share has declined in the past year (by -0.41%). Electric Ireland and SSE Airtricity both continued to experienced increases in shares of customer numbers and GWhs since Q4 2013. 22

17.51% 1.66% 9.36% 17.23% 3.19% 12.47% SSE Airtricity Bord Gáis Energy Electric Ireland Flogas 25.05% 38.85% Energia Vayu 29.76% 30.80% 7.56% Figure 3.21 Customer Numbers, IC Gas Market, Q4 2014 Figure 3.22 Consumption, GWhs, IC Gas Market, Q4 2014 Figures 3.23 and 3.24 below show the market share trends in terms of customer numbers and GWhs from Q1 2009 to Q4 2014. Market shares have changed significantly over time. 6.55% Figure 3.23 IC Gas Customer number market share trend over time Figure 3.24 IC Gas Consumption market share trend over time 23

3.3.4 Fuel Variation Tariff (FVT) Gas Market 11 Overall, in the FVT gas market, total customer numbers in Q4 2014 was 1,814 and total consumption was 2,183 GWhs. These represented an increase of +3.2% in customer numbers compared to Q4 2013, and a -2.9% decrease in GWhs since 2013. The following table shows the breakdown of customer numbers and GWhs by supplier and the change in market share in the year since Q4 2013. FVT Gas Market Bord Gáis Energy SSE Airtricity Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs 510 616 28.11% 28.22% -2.56% -2.74% 327 291 18.03% 13.33% +1.69% +5.06% Flogas 443 625 24.42% 28.63% +0.40% +3.01% Energia 231 263 12.73% 12.05% +0.21% -4.46% Vayu 280 377 15.44% 17.27% -0.27% -1.19% Electric Ireland 23 11 1.27% 0.50% - - Total FVT 1,814 2,183 100% 100% Table 3.13 FVT Retail Gas Market, Market Shares, Q4 2014 The table above and figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of 2014. Bord Gáis Energy has the highest share of customer numbers and Flogas has the highest share of GWhs in the FVT market. Similar to the IC and domestic markets, Bord Gáis Energy s share has continued to decline since Q4 2013. Vayu also experienced a decline in the past year. SSE Airtricity and Flogas both gained in the FVT market since Q4 2013. 15.44% 1.27% 18.03% 17.27% 0.50% 13.33% 12.73% SSE Airtricity Bord Gáis Energy 12.05% Flogas Energia Vayu 24.42% 28.11% Electric Ireland 28.63% 28.22% Figure 3.25 Customer Numbers, FVT Gas Market Segment, Q4 2014 Figure 3.26 Consumption, GWhs, FVT Gas Market Segment, Q4 2014 11 There are no longer regulated business tariffs; however, the reporting structure has been maintained for consistency and to allow for comparison. 24

Figures 3.27 and 3.28 below show the market share trends in terms of customer numbers and GWhs from Q1 2009 to Q4 2014. Bord Gáis Energy s market share has declined significantly and market share in the FVT segment 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 3.3.5 Regulated Tariff Formula (RTF) 12 Overall, in the RTF gas market, total customer numbers in Q4 2014 was 245 and total consumption was 6,329 GWhs. These represented a decline of over -1.6% in customer numbers compared to Q4 2013, and a +11.2% increase in GWhs since 2013. The following table shows the breakdown of customer numbers and GWhs by supplier and in percentage change in market share in the year since Q4 2013. 12 There are no longer regulated business tariffs, however, the reporting structure has been maintained for consistency and to allow for comparison. 25

RTF Gas Market Actual figures Q4 2014 Market share Q4 2014 % change in market share between Q4 2013 & Q4 2014 Cust Nos GWhs Cust Nos GWhs Cust Nos GWhs Bord Gáis Energy 53 1,263 21.63% 19.96% +0.75% +2.33% SSE Airtricity 38 1,005 15.51% 15.88% -0.55% +0.50% Electric Ireland 24 833 9.80% 13.16% +2.97% +8.05% Gazprom 12 1,078 4.90% 17.03% -0.32% -2.30% Energia 70 1,144 28.57% 18.08% -1.55% -4.66% Vayu 46 999 18.78% 15.78% -1.71% -4.00% Other 2 7 0.82% 0.11% +0.41% +0.08% Total RTF 245 6,329 100% 100% Table 3.14 RTF Retail Gas Market, Market Shares, Q4 2014 The table above and figures below show the market share in terms of customer numbers and GWhs for the fourth quarter of 2014. Energia has the largest share of customers and Bord Gáis Energy has the largest share of GWhs in the RTF market. Electric Ireland and Bord Gáis Energy experienced increases in market share since Q4 2013 (with Electric Ireland experiencing the highest increase in the year). The market shares of Vayu, Energia and Gazprom declined in the year. 18.78% 0.82% 15.51% 15.78% 0.11% 15.88% SSE Airtricity 18.08% Bord Gáis Energy Electric Ireland 21.63% Gazprom Energia Vayu Other 19.96% 28.57% 4.90% 9.80% Figure 3.29 Customer Numbers, RTF Gas Market Segment Q4 2014 17.03% 13.16% Figure 3.30 Consumption, GWhs, RTF Gas Market Segment Q4 2014 Figures 3.31 and 3.32 below show the market share trends in terms of customer numbers and GWhs from Q1 2009 to Q4 2014. The figures show that the market shares have become more dispersed over time with more suppliers actively participating in the market. 26

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 is the largest supplier in terms of customers and MWhs across all segments. While Electric Ireland s market share (MWhs) has increased across all segments, it remains below the threshold at which it was price deregulated. Its market share in the domestic electricity market is 56.3%. PrePayPower s share in the domestic market increased in 2014 by 1.5%. Energia has lost market share in all business segments compared to Q4 2013 but has gained relatively significantly in its first year of operation in the domestic market segment (market share of 3.2% at the end of 2014). In gas, Bord Gáis Energy remained the largest supplier in terms of customers and consumption in the domestic, industrial and commercial (IC) and FVT eligible 13 markets. In the RTF eligible 14 market, Energia is the largest supplier. The domestic gas market was the only market segment still subject to price regulation in early 13 Fuel variation tariff. There are no longer regulated business tariffs; however, the reporting structure has been maintained for consistency and to allow for comparison. 14 Regulated tariff formula. There are no longer regulated business tariffs, however, the reporting structure has been maintained for consistency and to allow for comparison. 27

2014. As all criteria to deregulate the gas market were deemed to be met, the domestic gas market was price deregulated on 1 st July 2014 which means that Bord Gáis Energy no longer has to seek approval from the CER to introduce domestic gas price changes. At the end of 2014, Bord Gáis Energy s market share in domestic gas was 52% representing a 5.2% reduction in market share compared to 2013. Electric Ireland gained market share in domestic gas by 2.4%, representing an increase in its market activity in the dual fuel area. New market entrant, Energia, gained significantly in the domestic gas market and had a market share of 3.8% in December 2014. The CER will continue to monitor both markets to ensure that competition is growing and continues to be promoted. 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 15. 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. 4.2.1 Total Switching The total number of switches completed in the electricity market in 2014 was 312,477. This represented an increase in the total number since 2013 of +17.4%. 88% of the total number of switches in 2014 were in the domestic market. Switching remained above the 20,000 level per month throughout 2014. Figure 4.1 Total Switching in Electricity, January 2009-December 2014 15 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. 29

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 2014 was 14%, which represents a higher proportion to that in 2013 (which was almost 12%). This rate compares well internationally and is indicative of an active market. 16 Total Electricity Market 2009 2010 2011 2012 2013 2014 Total number of switches 454,964 468,178 338,179 252,056 266,224 312,477 Switching rate 21% 21% 15% 11% 12% 14% Table 4.1 Total Switching in Electricity 4.2.2 Switching by Customer Category The domestic market made up 88% of total switching in electricity in 2014. 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 in 2014 was 20.6% higher than in 2013. 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 monthly switching was consistently higher in 2014 than in the previous two years. In 2014, April saw the highest level of switching which was influenced by the introduction of the first group switching scheme offered to domestic customers. 17 Figure 4.2 Domestic Electricity Switching 2009-2014 In the small business market, the level of switching varied across the year with a peak in November. 16 According to the VaasaETT description of levels of switching. 17 One Big Switch. 30

Figure 4.3 Small Business Electricity Switching 2009-2014 Switching in both the medium-sized business and LEU markets also varied across the year. 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. Figure 4.4 Medium Business Electricity Switching 2009-2014 Figure 4.5 LEU Electricity Switching 2009-2014 The average switching rates in the domestic, small business, medium business and LEU market segments were 14%, 18%, 13% and 11% respectively. By international comparison, all of these rates are relatively high. In comparison to 2013, there was an increase in the switching rate in the domestic segment, and rates in other segments remained relatively consistent. Electricity by Segment Domestic Small Business Medium Business Total number of switches, 2014 275,559 33,581 3,151 186 % change in total switching 2013-2014 +20.6% -1.6% -6.3% -8.4% Switching rate, 2014 14% 18% 13% 11% Table 4.2 Switching in Electricity by Market Segment, 2014 LEU 31

4.2.3 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 Electric Ireland and Bord Gáis Energy consistently experienced net losses in customer numbers each quarter in 2014, correlating with the reduction in domestic market share. SSE Airtricity experienced an overall loss in 2014. Energia entered the domestic market in January 2014 and experienced the highest net gain in the full year (+38,855). PrePayPower and the others category also gained in 2014 (by +27,316 and +8,608 respectively). Figure 4.6 Net Switching in Electricity by Supplier, January 2010-December 2014 The table below outlines the net switching levels across suppliers over time. SSE Airtricity experienced the highest net loss in customers (of -31,557 customers) in 2014. However, Electric Ireland and Bord Gáis Energy also experienced net losses (of -25,279 and -17,942). Electricity Net Switching Electric Ireland Energia SSE Airtricity Bord Gáis Energy PrePayPower Others Q4 2013-7,582 +1,987-6,778-580 +10,816 +2,137 Q1 2014-4,427 +6,777-9,136-3,565 +8,877 +1,474 Q2 2014-7,654 +11,284-13,505-126 +8,655 +1,346 Q3 2014-8,812 +15,706-10,134-7,478 +7,543 +3,175 Q4 2014-4,386 +5,088 +1,218-6,773 +2,241 +2,613 2013-31,175 +4,089 +3,696-32,709 +47,558 +8,545 2014-25,279 +38,855-31,557-17,942 +27,316 +8,608 Table 4.3 Net Switching in Electricity by Supplier, Q4 2013-Q4 2014 4.2.4 New Registrations New registrations in electricity are situations where a customer has a new connection or has moved into a site,which has been de-energised for at least 3 32

months and has remained vacant during the three month period 18. New registrations in electricity increased by 16% compared to 2013. There were 17,305 new registrations in total in 2014. Figure 4.7 New Electricity Registrations over time by supplier, January 2010-December 2014 Electric Ireland continues to be the supplier associated with the majority of new registrations in electricity. Electric Ireland s share of new registrations was 86% of total registrations (compared to 84% in 2013). Electricity New Registrations Others PrePayPower Bord Gáis Energy SSE Airtricity Energia Electric Ireland Total Q1 2014 19 26 195 261 70 3,013 3,584 Q2 2014 4 34 312 238 98 3,768 3,848 Q3 2014 33 33 236 356 163 3,909 4,730 Q4 2014 8 44 242 452 172 4,225 5,143 2014 64 137 985 1,307 503 14,915 17,305 % share 2013 0.15% 0.80% 4.93% 7.44% 2.34% 84.33% 100% % share 2014 0.37% 0.79% 5.69% 7.55% 2.91% 86.19% 100% Table 4.4 New Registrations in Electricity by Supplier, Q1 2013-Q4 2014 4.3 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. 18 ESB Networks. Sites normally remained registered to a supplier for 3 months after they are deenergised. 33

4.3.1 Total Switching The total number of switches completed in the gas market in 2014 was 109,750. This represented a decrease in the total number compared to 2013 of -6.2%. 97% of the total number of switches in 2014 were in the domestic market. Figure 4.8 Total Switching in Gas by Supplier, January 2010-December 2014 The switching rate is measured by calculating the proportion of total customers that switched in the period. The switching rate in gas in 2014 was almost 17%. This represented a lower proportion to that in 2013 (which had a rate of approximately 18%). By international comparison the gas market is still considered a very active market with regard to switching. Total Gas Market 2010 2011 2012 2013 2014 Total number of 93,937 113,280 110,579 117,002 109,750 switches Switching rate 15% 17% 17% 18% 17% Table 4.5 Total Switching in Gas 4.3.2 Switching by Customer Category The domestic market makes up 97% 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 2014 was 106,108 and there was an overall downward trend in switching per month throughout the year. In the IC market, total switches were 3,642 and the level of switching varied significantly across the year. 34

Figure 4.9 Switching in the Domestic Gas Sector Figure 4.10 Switching in the IC Gas Sector The switching rates in the domestic market was almost 17% and in the IC market the rate was almost 16%. Total switching has decreased in both market segments compared to 2013. Gas Market Segment Domestic IC Total number of switches, 2014 106,108 3,642 % change in total switching 2013-2014 -5.4% -23.9% Switching rate, 2014 16.7% 15.7% Table 4.6 Switching in Gas by Market Segment in 2014 4.3.3 Net Switching by Supplier The data shows that, similar to the case in 2013 and the experience in electricity, Bord Gáis Energy consistently experienced a net loss in customer numbers in 2014. Electric Ireland has experienced a net gain since it entered the domestic market in 35

March 2011 and it continued to experience significant net gains in gas throughout 2014. SSE Airtricity experienced net losses throughout 2014. Figure 4.11 Net Switching in Gas by Supplier, January 2010-December 2014 The table below outlines the net switching levels across suppliers in 2014. Bord Gáis Energy experienced the highest net loss in customers (of -35,430 customers), lower than its net loss in 2013. Energia experienced the highest net gain (of +24,687) and Electric Ireland also gained (+17,081 customers). Other suppliers experienced net losses in the year. SSE Airtricity Bord Gáis Energy Electric Ireland Energia Flogas Gazprom Vayu Q4 2013-407 -11,630 +10,939 +332 +901 - -135 Q1 2014-439 -8,325 +5,625 +2,972 +166 - +1 Q2 2014-1,521-9,867 +5,550 +5,934-91 +1-6 Q3 2014-2,009-10,034 +3,812 +9,615-1,383 - -1 Q4 2014-296 -7,204 +2,094 +6,166-751 -2-7 2013 +2,099-56,041 +52,599 +2 +1,667-1 -298 2014-4,265-35,430 +17,081 +24,687-2,059-1 -13 Table 4.7 Net Switching in Gas by Supplier, Q4 2013-Q4 2014 4.3.4 New Registrations New gas registrations are defined by GNI as the situation where a new meter is fitted or a meter is unlocked at sites where there is no supplier registered 19. The figure 19 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

below shows the trend in new registrations by supplier since January 2010. New registrations in gas have increased by +7% compared to 2013. There were 7,501 new registrations in total in 2014. Figure 4.12 New Registrations in Gas by Supplier, January 2010-December 2014 Bord Gáis Energy continues to be the supplier associated with the majority (64.7%) of new registrations in the gas market. However, Bord Gáis Energy s share of new registrations was 2.9% less than its share in 2013. Gas New Registrations SSE Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Total Q1 2014 109 1,033 166 163 14 5 1,490 Q2 2014 114 1,100 246 174 10 6 1,650 Q3 2014 145 1,136 311 101 39-1,732 Q4 2014 205 1,581 429 277 126 11 2,629 2014 573 4,850 1,152 715 189 22 7,501 % share 2013 8.66% 67.56% 14.52% 8.38% 0.63% 0.26% 100% % share 2014 7.64% 64.66% 15.36% 9.53% 2.52% 0.29% 100% Table 4.8 New Registrations in Gas by Supplier, Q1 2014-Q4 2014 4.4 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 electricity and gas markets are considered active and Ireland ranks well globally in terms of switching rates. The total number of switches completed in the electricity market in 2014 was 312,477. This represented an increase in the total number since 2013 of +17%. The 37

total number of switches complete in the gas market in 2014 was 109,750. This represented a reduction in the total number since 2013 of -6.2%. Switches in the domestic market made up 88% and 96% of total switching in electricity and gas respectively. Energia, the newest supplier in the domestic markets, experienced the highest net gain in customers in both electricity and gas in 2014. Bord Gáis Energy experienced the highest net loss in the gas market and SSE Airtriicty had the largest net loss in electricity. 38

5.0 Competition and Price 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 (i.e. Bord Gáis Energy in gas and ESB Customer Supply in electricity, now Electric Ireland). For each market segment in electricity and gas the CER identified the various conditions that must be met in order for price 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, all retail markets are price deregulated with the domestic gas market being the most recently deregulated in July 2014. All suppliers, including the incumbent gas and electricity suppliers, are free to set their own prices. The incumbent suppliers no longer have to seek approval from the CER of potential price changes. 5.2 Price Deregulation in Electricity All market segments in electricity are price deregulated. Business markets were price deregulated in October 2010 and the domestic market was deregulated in April 2011. The following were the criteria for price 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 2014, Electric Ireland s market share (MWh), at 56.31% in the domestic market, 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 2014 compared to 2013 (when it had a 57.2% share). 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 14% the switching rate in the domestic market remains above 10% and is higher than the rate in 2013. 5.3 Price Deregulation in Gas The gas business markets were fully deregulated in October 2011. The domestic NDM retail gas market was price deregulated on 1 st July 2014 20. 20 CER/14/117 Domestic Gas Market Deregulation Decision. 39

The following were the criteria for price deregulation in the domestic gas market: 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%. In Q4 2014, Bord Gáis Energy s domestic market share (customer numbers), at 52.03%, was lower than in July 2014 (when it was price deregulated). Bord Gáis Energy s share of customers in the domestic market continuously reduced in 2014. There continues to be two non-bord Gáis Energy 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 16.7% the switching rate in the domestic market remains above 10%. 5.4 Summary The domestic gas market was price deregulated on 1 st July 2014. All electricity and gas markets are now price deregulated. The CER commits to continue to monitor all electricity and gas market segments and, as outlined in the NDM gas decision paper 21, should it feel that customers are not benefiting from deregulation of any market, the CER will take action to improve matters. 21 CER/13/096, Review of the NDM Retail Gas Market. 40

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 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 dependence on fossil fuels and the knock on impact that this 41

has on energy prices in Ireland. The high reliance of Ireland on imported fossil fuels, in particular gas 22, 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 23, 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. 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 GNI 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) 24 have jointly regulated the all-island wholesale electricity market, which is known as the SEM (Single Electricity Market), since 2007. 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. Eurostat publishes data on average end user prices. These average end user prices are given for 5 consumption bands in the domestic and for 6 bands in the Industrial and commercial markets (see here for more details). The dominant consumption band for the domestic market in Ireland is DD and that for the industrial and commercial market is IB. The following charts break down the average electricity prices for these dominant consumption bands into (i) energy and supply charges,(ii) network charges and (iii) taxes and levies. They are presented as a % of the euro cent average end user price for the given consumption band. 22 Oil prices do not significantly impact on retail prices. 23 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 24 Together referred to as the Regulatory Authorities/RAs. 42

Figure 6.2 Disaggregated Domestic Electricity Price, Band DD, S2 2014 25 Figure 6.3 Disaggregated Industrial & Commercial Electricity Price, Band IB, S2 2014 26 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 56% for domestic and 65% 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 The electricity and gas markets in Ireland are fully price deregulated, therefore the CER no longer regulates electricity or gas prices in the domestic or business 25 Source: Eurostat. 26 Source: Eurostat. 43