Electricity & Gas Retail Markets Annual Report 2012

Transcription

1 Electricity & Gas Retail Markets Annual Report 2012 DOCUMENT TYPE: REFERENCE: Information Paper CER/13/120 DATE PUBLISHED: 4 June 2013 QUERIES TO: Adrienne Costello acostello@cer.ie 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 were no new entrants in the gas or electricity markets; however data suggests that the incumbent supplier in the gas NDM retail market, Bord Gáis Energy, is losing market share which is indicative of competition in the market. In electricity, Electric Ireland continues to be the largest supplier in terms of customers across all segments and in terms of MWhs in the domestic and LEU markets. Energia remains the largest supplier (in terms of MWhs) in the small and medium business markets. The domestic market share (MWhs) of Electric Ireland (59.6%) is just under the threshold at which it was deregulated (60%). In gas, Bord Gáis Energy is the largest supplier in terms of customers and consumption in the domestic, IC and FVT markets. In the RTF market, Bord Gáis Energy has the highest GWhs and Vayu has the largest number of customers. While Bord Gáis Energy had a 65.65% share of customers in the domestic gas market in Q4 2012, it has experienced significant decreases in share over the past year. Assuming a similar rate of attrition that was experienced in 2012, it would be expected that Bord Gáis Energy will reach both thresholds for deregulation (60% without rebranding and the 55% with rebranding) within the next 12 months. In the electricity and gas domestic markets, Bord Gáis Energy continues to experience a decline in share of customers and consumption whereas Electric Ireland continues to experience an increase in share of customers and consumption. Flogas continued to gain in the gas markets in which it operates (domestic, IC and FVT). Airtricity is increasing market share in terms of customers across all segments in electricity and in the IC and RTF segments of gas. Airtricity is losing customers in the domestic gas market and the FVT segment. The CER will continue to monitor both markets to ensure that competition continues to develop. Customer Switching Switching 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 switching activity is sufficient. The Irish gas market is considered a hot market. Ireland ranks very well globally in terms of switching rates. However, reductions in switching were experienced in both electricity and gas between 2011 and 2012, and the level of switching in electricity appears to be stabilising. The total number of switches completed in the electricity market in 2012 was 252,056. This represented a decline in the total number since 2011 of 25%. This decline is driven by a decrease in domestic market switching. Increases were 3

4 experienced in all other market segments. The total number of switches completed in the gas market in 2012 was 110,579. This represented a decline in the total number since 2011 of 2% (with declines of 2% in the domestic market and 11% in IC). Electric Ireland experienced the highest net gain in both the electricity and gas markets and Bord Gáis Energy experienced the highest net loss in both markets. Given the importance of high rates of switching in sustaining competitive 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. A decision paper CER/13/096 NDM Retail Market Review was published in early April 2013 which 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. By the end of 2012, the domestic gas market had not met all the required criteria for deregulation as set out in the NDM Review. Bord Gáis Energy s market share at 65.65% was above the required threshold of 60% with rebranding. Assuming a 2% reduction in share per quarter, it would be expected that Bord Gáis Energy will reach the thresholds within the next 12 months. Electric Ireland is increasing market share in the domestic electricity market and is just under the threshold at which it was deregulated (60%). In addition, the switching rate is only slightly above the 10% as required for deregulation. The CER will continue to monitor the gas and electricity markets and, as outlined in the recent NDM decision paper, should it feel that customers are being harmed; the CER will use its regulatory powers to intervene and improve matters. Customer Debt and Disconnections Customer protection measures continued to be enhanced during The CER published a decision paper, CER/12/081, on the Supplier Handbook for suppliers of electricity and gas, which set out the minimum service levels that supplier must provide their customers with. The Supplier Handbook covers all key areas of customer-supplier interaction, including: billing, disconnection, marketing and customer sign-up was the first full year since the introduction of the debt flagging process and the rollout of pay-as-you-go (PAYG) keypad meters in electricity. These developments provided suppliers with tools to assist customer in managing their bills and minimise disconnections. 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. Overall approximately 1.9% of electricity change of supplier requests were debt flagged (4,746), and in gas 0.6% were debt flagged (829). 4

5 There was a general upward trend throughout 2012 in the number of PAYG meters installed in electricity; however, compared to 2011, gas PAYG meter installations has declined. The CER is continuing to monitor the number of PAYG meter installs on an on-going basis and is working with industry and customer advocacy and support groups to further promote PAYG meters to those who would benefit most from them. The economic environment in 2012 continued to be challenging and has seen a continued level of debt among energy customers. Due to the overall increase in the number of customers in arrears, gas and electricity domestic disconnections for nonpayment of account (NPA) increased in 2012 (by 82% in gas). There continues to be stringent obligations on suppliers to make disconnections the last resort and all suppliers offer PAYG meters in advance of disconnection for NPA (in accordance with their customer protection obligations of their Supply Licences). Without PAYG meters, disconnections would have been significantly higher in In 2012, the CER extended out to the end of 2013 the requirement that 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. While the revised Supplier Handbook was published and PAYG meters continued to be installed, disconnections remained high in The CER will undertake an audit of suppliers Codes of Practice on Disconnections with a particular focus on the process for PAYG installs and payment plans during 2013 and will continue to work with suppliers and other stakeholders to determine what further actions can be taken to reduce the level of disconnections and increase the uptake of PAYG meters. Prices In relation to energy prices, all suppliers are required to publish details of the tariff plans that are available to domestic customers. To aid customers to confidently compare tariffs, the CER put in place an accreditation framework for price comparison website services. In 2012, the first price comparison website was accredited under this framework 1. These developments serve to provide customers with more clarity and transparency in relation to energy prices. On average, the latest data show that Irish electricity prices are above the euro area average, while gas prices are below the average. Next Steps The CER will continue to monitor the electricity and gas retail markets throughout The next retail markets report will cover Q The CER will also issue monthly competition reviews containing latest switching data and data on active suppliers in the NDM domestic gas sector. They will also include forecast data on market shares for the NDM gas sector which will be based on latest switching trends. The forecast will help determine when BGE will reach the threshold for deregulation and when deregulation will occur. The CER will publish a proposed decision paper on a new market monitoring framework in June. This paper will outline the CERs proposed decision in relation to the reporting of metrics required under the 3 rd Package and as suggested by 1 A further website was accredited in May

6 ERGEG. The CER will consult with relevant stakeholders with regard the implementation of the new framework throughout

7 Table of Contents 1.0 Introduction Objective of Report Market Share Introduction Active Suppliers Market Developments Electricity Market Overall Trends in Retail Electricity Domestic Market Small-Sized Business Market Medium-Sized Business Market Large Energy Users (LEUs) Gas Market Overall Trends in Retail Gas Domestic Market Industrial and Commercial (IC) Market Fuel Variation Tariff (FVT) 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 Customer Protection, Debt and Disconnections Introduction Debt Flagging Pay as You Go Meters PAYG Disconnections for Non-Payment of Account Disconnections Electricity Market Disconnections Gas Market Estimation of Vacant Premises Summary - Customer Debt and Disconnections Electricity and Gas Retail Prices Introduction Energy Prices in Ireland Summary - Prices

8 7.0 Conclusion & Next Steps Conclusion Market Monitoring Next steps Appendix A Electricity Market Data Tables Appendix B - Gas Market Data Tables

9 1.0 Introduction 1.1 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 2012, 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 2013 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 2013 survey repeated the structure from surveys in 2011 and 2012 to facilitate trend analysis. Both reports are published simultaneously to provide a complete picture, qualitative and quantitative, of market activities. 9

10 2.0 Market Share 2.1 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 previous quarter. 2.2 Active Suppliers There were 7 active suppliers 2 in the electricity retail business and domestic market 3 in There were 8 active suppliers 4 in the gas retail business and domestic market. In 2012 there were no new market entrants in the gas or electricity markets. The main suppliers in the electricity and gas retail market are identified in the following table. Electricity Domestic Electricity Non- Gas Domestic Gas Non-Domestic Domestic Electric Ireland Electric Ireland Electric Ireland Electric Ireland Bord Gáis Energy Bord Gáis Energy Bord Gáis Energy Bord Gáis Energy Airtricity Airtricity Airtricity Airtricity PrePay Power Vayu Flogas Vayu Energia Energia Endesa 5 Phoenix Gazprom Table 2.1 Suppliers Serving the Retail Electricity and Gas Markets in Market Developments There were a number of developments and market innovations in 2012 that have positive implications on the level of competition in the electricity and gas markets. Harmonised systems between Northern Ireland and the Republic of Ireland went live in October This was the result of a cross-border project between the CER and the Northern Ireland Utility Regulator to align, as far as possible, the supply market processes and IT systems. This development will make it easier/more cost effective for suppliers to operate in both jurisdictions in an optimal manner, to the benefit of consumers. In electricity there is a new supplier-led model emerging which facilitates lifestyle choice prepayment where the customer pays for a prepayment device that is installed by the supplier. Currently, Pinergy and PrePayPower offer such models. This development increases the choice that is available to customers and has a positive knock-on effect on competition in the market. In 2012, changes to the Trading and Settlement Code and the licence to supply electricity were carried out to further facilitate demand side participation in the market and in doing such move a step further towards the Demand Side Vision for Active suppliers are those that are actively supplying and seeking customers. 3 Airtricity, Bord Gáis Energy, Electric Ireland, Endesa Ireland, Energia, Pre Pay Power and Vayu. 4 Airtricity, Bord Gáis Energy, Electric Ireland, Energia, Flogas, Gazprom, Phoenix and Vayu. 5 Endesa were acquired by SSE Generation Ltd in October

11 These changes facilitated the participation of Demand Side Units in the SEM and in 2012, two Demand Side Units became operational in this jurisdiction. 2.4 Electricity Market The electricity market is comprised of four different market segments covering different DUoS groups (distribution use of system groups or DGs) 6 : 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). Data is presented in terms of actual customer numbers and consumption (MWhs) for Q as well as showing the change in percentage share since the previous quarter/year. The commentary discusses the change in the last quarter as well as the trend in the full year. 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. 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 2012 were 2,237,203 and total consumption was 24,164,342 MWhs. This represented decreases of 0.1% and 1.34% 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. 11

12 Customer Numbers Q Q Q Q % change between 2011 and 2012 Domestic Market 2,023,288 2,022,736 2,022,065 2,021,455 2,021, % Small Business 190, , , , , % Medium Business 24,357 24,339 24,375 24,391 24, % LEU 1,648 1,653 1,656 1,664 1, % Total 2,240,002 2,239,038 2,238,103 2,237,203 2,237, % Table 2.2 Retail Electricity Market, Customer Numbers 2012 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 0.06% and 0.53% respectively. Customer numbers increased between 2011 and 2012 in the medium and LEU market segments. Consumption, MWhs Q Q Q Q % change between 2011 and 2012 Domestic Market 2,443,157 1,974,094 1,903,727 2,357,787 8,678, % Small Business 1,025, , , ,437 3,697, % Medium Business 1,063, ,854 1,003,650 1,068,990 4,119, % LEU 1,881,492 1,880,907 1,986,583 1,919,325 7,668, % Total 6,413,331 5,699,852 5,735,620 6,315,539 24,164, % Table 2.3 Retail Electricity Market, Consumption (MWhs) 2012 Total consumption declined since The only market segment to increase consumption was the LEU segment. This is possibly explained by the increase in customers in the period. There was a variation in consumption levels throughout 2012, with lower levels of consumption in Q2 and Q3. This aligns with the experience in Forecast numbers for customers and consumption can be found in Appendix A Domestic Market Overall, in the domestic electricity market, total customer numbers in Q were 2,021,455 and total consumption was 2,357,787 MWhs. This represented decreases of 0.06% and 2.1% respectively compared to the same period in The following table shows the breakdown of customer numbers and MWhs by supplier: Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 1,304,764 1,405, % 59.60% +1.27% +2.73% Airtricity 365, , % 19.85% +0.52% -0.20% Bord Gáis Energy 328, , % 19.29% -2.64% -3.39% Others 22,959 29, % 1.26% +0.87% +0.86% Total 2,021,455 2,357, % 100% Table 2.4 Domestic Electricity Retail Market Customer Nos. & MWhs, Q

13 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 Table 2.4 and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of Electric Ireland retains the highest share of customers and MWhs in the domestic electricity market and its share is increasing. Airtricity has the second highest share but its share is declining in terms of consumption and increasing in terms of customers. Bord Gáis Energy has experienced a decline in its market share of both customer numbers and MWhs since Q % 1.14% 19.29% 1.26% Electric Ireland Airtricity 18.06% 64.55% Bord Gáis Energy Others 19.85% 59.60% Figure 2.1 Customer numbers share, domestic market, Q Figure 2.2 Consumption (MWhs) share, domestic market, Q Figures 2.3 and 2.4 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 in customer numbers has stabilised, registering a very slight increase on Q3 levels. Over the same period Airtricity has seen a rise in customer numbers but a small decline in MWhs. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Electric Ireland Airtricity Bord Gáis Energy Others Figure 2.3 Domestic customer number market share trend over time Electric Ireland Airtricity Bord Gáis Energy Others Figure 2.4 Domestic consumption market share trend over time Small-Sized Business Market Overall, in the small-sized business electricity market, total customer numbers in Q were 189,693 and total consumption was 969,437 MWhs. This represented decreases of 0.5% and 1.5% respectively compared to the same period in The following table shows the breakdown of customer numbers and MWhs by supplier: 13

14 Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 87, , % 31.04% -1.15% +0.28% Airtricity 40, , % 23.70% +2.69% +5.01% Bord Gáis Energy 17, , % 10.42% -1.74% -3.30% Energia 44, , % 34.48% +0.13% -2.28% Others 179 3, % 0.36% +0.06% +0.28% Total 189, , % 100% Table 2.5 Small-Sized Business Electricity Retail Market Customer Nos. & MWhs, Q Table 2.5 and the figures below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2012 in the small business market. Electric Ireland maintains the largest share of customers in the small business market, and Energia has the largest share of MWhs. However, Electric Ireland has lost share of customer numbers and Energia has lost market share in MWhs since Q Airtricity has gained market share in terms of customer numbers and consumption. 9.33% 0.09% 10.42% 0.36% Electric Ireland 31.04% 21.29% 45.88% Energia Airtricity 23.70% Bord Gáis Energy Others 23.41% Figure 2.5 Customer numbers share, smallsized business market, Q % Figure 2.6 Consumption (MWhs) share, smallsized business market, Q Figures 2.7 and 2.8 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 continued to experience a decline in market share and registered decreases in both customer numbers and MWhs 14

15 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Electric Ireland Energia Airtricity Bord Gáis Energy Others Figure 2.7 Small business customer number market share trend over time Electric Ireland Energia Airtricity Bord Gáis Energy Others Figure 2.8 Small business consumption market share trend over time Medium-Sized Business Market Overall, in the medium-sized business electricity market total customer numbers in Q were 24,391 and total consumption was 1,068,990 MWhs. This represented increases of 0.1% and 0.9% respectively compared to the same period in The following table shows the breakdown of customer numbers and MWhs by supplier: Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland 13, , % 24.87% -1.15% -2.52% Airtricity 3, , % 27.11% +3.34% +3.96% Bord Gáis Energy 1,183 88, % 8.26% -1.87% -3.45% Energia 5, , % 37.64% -0.39% +0.49% Others , % 2.11% +0.45% +1.51% Total 24,391 1,068, % 100% Tables 2.6 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 Similar to the small business market, Electric Ireland has the highest share of customer numbers and Energia has the highest share of MWhs, however, both suppliers experienced declines in share of customers and Electric Ireland also experienced a decline in MWhs since Q Airtricity share grew relatively significantly between Q and Q4 2012, while Bord Gáis Energy also experienced a decline in market share and customers. 15

16 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June % 0.72% 8.26% 2.11% 15.98% Electric Ireland Energia 27.11% 24.87% Airtricity 22.49% 55.97% Bord Gáis Energy Others Figure 2.9 Customer numbers share, mediumsized business market, Q % Figure 2.10 Consumption (MWhs) share, medium-sized business market, Q Figures 2.11 and 2.12 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, Electric Ireland has continued to experience declines in share. Bord Gáis Energy has also experienced declines in share, while Airtricity s share has increased in both customers and MWhs over time. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Electric Ireland Energia Airtricity Bord Gáis Energy Others Figure 2.11 Medium business customer number market share trend over time Electric Ireland Energia Airtricity Bord Gáis Energy Others Figure 2.12 Medium business consumption market share trend over time Large Energy Users (LEUs) Overall, in the LEU electricity market total customer numbers in Q was 1,664 and total consumption was 1,919,325 MWhs. This represented increases of 1% and 2.4% respectively compared to the same period in The following table shows the breakdown of customer numbers and MWhs by supplier: 16

17 Actual figures Q Market share Q % change in market share between Q & Q Cust Nos MWhs Cust Nos MWhs Cust Nos MWhs Electric Ireland , % 40.89% -6.02% -7.56% Airtricity , % 22.42% +6.22% +8.07% Bord Gáis Energy , % 9.31% -1.07% +0.76% Energia , % 18.45% -0.53% -1.61% Vayu 75 51, % 2.66% +1.41% +1.32% Others , % 6.27% -0.03% -0.98% Total 1,664 1,919, % 100% Tables 2.7 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, however has experienced a significant loss in share between Q and Q % 4.51% 2.16% Electric Ireland 9.31% 2.66% 6.27% 42.13% Energia 40.89% Airtricity 26.20% Bord Gáis Energy Vayu Others 22.42% 15.63% Figure 2.13 Customer numbers share, LEU market, Q % Figure 2.14 Consumption (MWhs) share, LEU market, Q Figures 2.15 and 2.16 below show the market share trends in terms of customer numbers and MWhs from Q to Q The LEU market was the first to see competition develop and therefore the market is more mature than the other three market segments. Airtricity has experienced a large gain in share of MWhs and customers of 8.07% and 6.22% respectively since Q Vayu also experienced increases in share of customers and MWhs since Q4 2011, with Energia experiencing losses in share of MWhs and customers since Q

18 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Electric Ireland Energia Airtricity Bord Gáis Energy Vayu Others Figure 2.15 LEU Customer number market share trend over time Electric Ireland Energia Airtricity Bord Gáis Energy Vayu Others Figure 2.16 LEU Consumption market share trend over time 2.5 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 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 The current method of calculation of gas volumes (GWhs) supplied uses Non Daily Metered (NDM) allocations data, which is derived statistically. Bord Gáis Networks (BGN) has suggested that this method of calculation is not the most statistically accurate, and when compared with reconciliation data (i.e. metered throughput), allocation data has accuracy in the range of +/-15% for NDM IC s and +/-4% for the domestic segment. 7 In gas, only those with greater than 5 customers are reported separately Overall Trends in Retail Gas Overall, in the gas market, total customer numbers in the full year 2012 were 655,504 and total consumption was 17,383 GWhs. This represented increases of 0.55% and 6% respectively compared to The CER is due to publish a consultation paper on a BGN proposed change to the NDM volume reporting methodology. 18

19 Customer Numbers Q Q Q Q % change between 2011 and 2012 Domestic Market 628, , , , , % IC 22,855 21,814 22,799 22,949 22, % FVT 1,735 1,740 1,757 1,750 1, % RTF % Total 653, , , , , % Table 2.8 Retail Gas Market, Customer Numbers 2012 Total customers in gas increased between 2011 and The number of customers in all market segments increased in the same period with the highest rate of increase in the RTF and FVT markets. Consumption increased by 6% between 2011 and 2012 with the highest percentage increases in the IC and FVT segments, of 1.23% and 1.21% respectively. Forecasted consumption figures are in Appendix 2. Consumption, GWhs 2012 % change between 2011 and 2012 Domestic Market 7, % IC 1, % FVT 2, % RTF 5, % Total 17, % Table 2.9 Retail Gas Market, Consumption (GWhs) Domestic Market Overall, in the domestic gas market total customer numbers in Q were 630,559 and total consumption was 7,774 GWhs. This represented an increase of almost 0.3% in customer numbers compared to Q3 2012, and a 5.5% increase in GWhs since Q The following table shows the breakdown of customer numbers and GWhs by supplier: 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 413,939 5, % 68.27% -7.35% -9.63% Airtricity 108,054 1, % 18.97% -1.86% +1.57% Electric Ireland 78, % 8.41% +8.38% +6.71% Flogas 30, % 4.35% +0.83% +1.35% Others % 0% Total 630,559 7, % 100% Table 2.10 Domestic Retail Gas Market, Market Shares, Q

20 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 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 65.65% and 68.27% respectively. However, its share is declining with a 7.35% 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. Airtricity has the second highest share of customers but experienced a loss in customers between Q and Q % 4.83% 17.14% Airtricity 8.41% 4.35% 18.97% Bord Gáis Energy Electric Ireland Flogas Others 65.65% Figure 2.17 Customer Numbers, Domestic Market, Q % Figure 2.18 Consumption, GWhs, Domestic Market, Q Figures 2.19 and 2.20 below show the market share trends in terms of customer numbers and GWhs from Q to Q The charts below show that there has been a significant change in Bord Gáis Energy s share over time. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Airtricity Bord Gáis Energy Electric Ireland Flogas Figure 2.19 Customer number market share trend over time Airtricity Bord Gáis Energy Electric Ireland Flogas Figure 2.20 Consumption market share trend over time Industrial and Commercial (IC) Market Overall, in the IC gas market, total customer numbers in Q were 22,949 and total consumption was 1,739 GWhs. This represented an increase of 0.7% in customer numbers compared to Q3 2012, and an 8% increase in GWhs since Q The following table shows the breakdown of customer numbers and GWhs by supplier: 20

21 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 10, % 38.99% -4.77% -6.6% Airtricity 1, % 4.37% +1.5% +3.18% Electric Ireland % 1.09% +1.65% +0.81% Flogas 5, % 30.53% +4.57% +7.22% Energia 3, % 21.16% -3.0% -4.52% Vayu % 3.80% +0.05% -0.09% Others % 0.06% Total 22,949 1, % 100% Table 2.11 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. Energia also saw its share of customers and GWhs decline between Q and Q Flogas, Electric Ireland and Airtricity all have experienced increases in shares of customer numbers and GWhs since Q % 2.46% 0.01% 5.29% Airtricity 3.80% 0.06% 4.37% Bord Gáis Energy 21.16% 38.99% Electric Ireland Flogas 25.65% 46.52% Energia Vayu 2.92% Figure 2.21 Customer Numbers, IC Gas Market, Q Others 30.53% Figure 2.22 Consumption, GWhs, IC Gas Market, Q Figures 2.23 and 2.24 below show the market share trends in terms of customer numbers and GWhs from Q to Q The figures below show that the market shares have changed significantly over time, with Flogas gaining considerably and Bord Gáis Energy continuing to lose share. 1.09% 21

22 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Others Figure 2.23 Customer number market share trend over time Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Others Figure 2.24 Consumption market share trend over time Fuel Variation Tariff (FVT) Market 8 Overall, in the FVT gas market, total customer numbers in Q were 1,750 and total consumption was 2,238 GWhs. This represented a decrease of 0.4% in customer numbers compared to Q3 2012, and a 7% increase in GWhs since Q The following table shows the breakdown of customer numbers and GWhs by supplier and the change in market share since Q 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 % 35.03% -5.96% % Airtricity % 2.37% -2.4% -0.71% Flogas % 23.10% +4.18% +7.64% Energia % 16.35% +5.43% -0.09% Vayu % 22.97% -1.47% +4.13% Others % 0.18% +0.23% +0.05% Total 1,750 2, % 100% Table 2.12 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 have 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 significantly declined since Q Vayu is the only other supplier to experience a decline in customer numbers. All other suppliers increased their market shares, with significant increases by Energia and Flogas 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. 22

23 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June % 0.40% 2.63% 33.66% Airtricity Bord Gáis Energy 22.97% 0.18% 2.37% 35.03% Flogas Energia 19.77% Vayu Others 16.35% 22.34% Figure 2.25 Customer Numbers, FVT Gas Market Segment, Q % Figure 2.26 Consumption, GWhs, FVT Gas Market Segment, Q Figures 2.27 and 2.28 below show the market share trends in terms of customer numbers and GWhs from Q to Q Market share is dispersed among four key suppliers. Overtime Bord Gáis Energy s market share has declined significantly. Vayu and Flogas were the main beneficiaries of Bord Gáis Energy s declining market share. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Airtricity Bord Gáis Energy Energia Flogas Vayu Others Figure 2.27 Customer number market share trend over time Airtricity Bord Gáis Energy Energia Flogas Vayu Others Figure 2.28 Consumption market share trend over time Regulated Tariff Formula (RTF) 9 Overall, in the RTF gas market, total customer numbers in Q was 246 and total consumption was 5,662 GWhs. This represented a decrease of over 1% in customer numbers compared to Q3 2012, and a 6% increase in GWhs since Q The following table shows the breakdown of customer numbers and GWhs by supplier and in percentage change in market share since Q There are no longer regulated business tariffs, however, the reporting structure has been maintained for consistency and to allow for comparison. 23

24 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 48 1, % 21.09% -5.59% -2.97% Airtricity % 6.22% +3.58% +0.43% Electric Ireland % 2.93% -2.11% -1.79% Gazprom 14 1, % 19.37% +1.99% +1.38% Energia 53 1, % 20.66% +0.97% -2.39% Vayu 78 1, % 19.68% +3.31% +0.70% Phoenix % 10.05% -2.15% +4.65% Total 246 5, % 100% Table 2.13 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 Vayu has the largest share of customers in the RTF market but Bord Gáis Energy has the highest share of GWhs. Electric Ireland, Bord Gáis Energy and Phoenix have all experienced declines in market share of customer numbers since Q The largest increase in market share of customer numbers was experienced by Airtricity, with Vayu also experiencing a significant increase since Q % 9.76% 19.51% Airtricity Bord Gáis Energy 19.68% 10.05% 6.22% 21.09% 31.71% Electric Ireland Gazprom 4.07% Energia 5.69% Vayu 2.93% 21.54% Phoenix 20.66% 19.37% Figure 2.29 Customer Numbers, RTF Market Segment Q Figure 2.30 Consumption, GWhs, RTF Market Segment Q Figures 2.31 and 2.32 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. 24

25 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Airtricity Bord Gáis Energy Electric Ireland Gazprom Energia Vayu Phoenix Figure 2.31 Customer number market share trend over time Airtricity Bord Gáis Energy Electric Ireland Gazprom Energia Vayu Phoenix Figure 2.32 Consumption market share trend over time 2.6 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 in the domestic and LEU markets. Energia remains the largest supplier (in terms of MWhs) in the small and medium business markets. The domestic market share (MWhs) of Electric Ireland (59.6%) is just under the threshold at which it was deregulated (60%). In gas, Bord Gáis Energy is the largest supplier in terms of customers and consumption in domestic, IC and FVT markets. In the RTF market Bord Gáis Energy has the highest GWhs and Vayu has the largest number of customers. While Bord Gáis Energy had a 65.65% share of the domestic gas market in Q4 2012, it has experienced significant decreases in share over the past year. In the electricity and gas domestic markets, Bord Gáis Energy continues to experience a decline in share of customers and consumption whereas Electric Ireland continues to experience an increase in share of customers and consumption. Flogas continued to gain in the gas markets in which it operates (domestic, IC and FVT). Airtricity is increasing market share in terms of customers across all segments in electricity and in the IC and RTF segments of gas. Airtricity is losing customers in the domestic gas market and the FVT segment. The CER will continue to monitor both markets to ensure that competition is growing and continues to be promoted. 25

26 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Customer Numbers CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June Customer Switching and New Registrations 3.1 Introduction Switching refers to transactions where a customer changes from one supplier to another. It is measured by the number of completed switches in a period (not switching requests). This section contains data on customer switching activity with a breakdown of suppliers 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 10. 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. 3.2 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 2012 was 252,056. This represented a decline in the total number since 2011 of 25%. 85% of the total number of switches in 2012 were in the domestic market. Switching remained around the 20,000 level per month throughout 2012, with a dip in December. 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - Total Switches Domestic Small Business Medium Business LEU Figure 3.1 Total Switching in Electricity, January 2009-December 2012 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 10 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. 26

27 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Numbers Numbers CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 from the quarterly customer numbers data. The average switching rate in electricity in 2012 was 11.3%, which represents a lower proportion to that in 2011 (which was 15.1%). However, this compares well internationally and is considered an active market. 11 Total Electricity Market Total number of switches 454, , , ,056 Switching rate 20.5% 21.0% 15.1% 11.27% Table 3.1 Total Switching in Electricity Switching by Customer Category The domestic market makes up 85% of total switching in electricity. The figures below analyse the trend in switching across all market segments. The trend varies quite significantly across market segments. In the domestic market, the number of switches per month in 2012 was consistently around 20,000 and this is the lowest level it has been since market opening. Figure 3.2 clearly demonstrates how domestic switching peaked in the first six months of 2009 following the entry of Bord Gáis Energy and Airtricity in the domestic market. In the small business market, the level of switching varied across the year with a peak in May and an increase again towards the end of the year. However, the increase in Q4 was not as substantial as the increase that was experienced in the same period in Switching in both the medium sized business and LEU markets also varied across the year. In the medium-sized business, the level in Q4 2012, while declining, was slightly higher than the levels in the same period in previous years. Switching in the business sectors are 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. 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Figure 3.2 Domestic Switching Figure 3.3 Small Business Switching According to the VaasaETT description of levels of switching. 27

28 Jan-10 Mar-10 May-10 Jul-10 Sept-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sept-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Net change Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Numbers Numbers CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June , Figure 3.4 Medium Business Switching Figure 3.5 LEU Switching The average switching rates in small business, medium business and LEU are 17.5%, 13.4% and 14% respectively. By international comparison, these rates are relatively high. Switching increased in all business markets since Electricity by Segment Domestic Small Business Medium Business Total number of switches, ,196 33,358 3, % change in total switching % % % +7.44% Switching rate, % 17.5% 13.4% 14% Table 3.2 Switching in Electricity by Market Segment, 2012 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 2012, however, its loss is not as significant as was experienced in Airtricity had a volatile year with large net gains experienced in early 2012 but net losses in the second half of the year. In December 2012, Electric Ireland experienced its first net loss since just after the deregulation of the domestic market in April ,000 10, ,000-20,000-30,000-40,000 Electric Ireland Energia Airtricity Bord Gáis Energy Others Figure 3.6 Net Switching in Electricity by Supplier, January 2010-December

29 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sept-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sept-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 The table below outlines the net switching levels across suppliers over time. In 2012, Bord Gáis Energy experienced the highest net loss in customers (of 55,744 customers) and Electric Ireland experienced the highest net gain (of 20,763 customers). With regard to Bord Gáis Energy, its net loss declined over the course of Electric Ireland Energia Airtricity Bord Gáis Energy Others Q ,059-1,538 15,413-16, Q , ,990-17,357 3,039 Q , ,845-14,658 4,662 Q , ,865-13,932 4,889 Q , ,668-9,797 5, ,993 3,789 81,373-51,103 1, , ,368-55,744 17,881 Table 3.3 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 12 ). New registrations in electricity have declined by 13.5% since There were 14,303 new registrations in total in ,500 2,000 1,500 1, Others Bord Gáis Energy Airtricity Energia Electric Ireland Figure 3.7 New Electricity Registrations over time by supplier, January 2010-December 2012 Electric Ireland continues to be the supplier associated with the majority of new registrations in electricity. However, Electric Ireland s share of new registrations has declined by over 4% since ESB Networks. Sites normally remained registered to a supplier for 3 months after they are deenergised. 29

30 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 Others Bord Gáis Energy Airtricity Energia Electric Ireland Total Q ,977 3,320 Q ,887 3,339 Q ,118 3,610 Q ,516 4, ,498 14,303 % share % 2.76% 2.98% 2.70% 91.54% 100% % share % 3.67% 5.57% 3.08% 87.38% 100% Table 3.4 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 2012 was 110,579. This represented a decline in the total number since 2011 of 2%. 96.5% of the total number of switches in 2012 were in the domestic market. 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Residential IC Total Figure 3.8 Total Switching in Gas by Supplier, January 2010-December 2012 The switching rate is measured by calculating the proportion of total customers that switched in the period. The switching rate in gas in 2012 was 16.97%. This represents a lower proportion to that in 2011 (which had a rate of 17.4%). However, by international comparison the gas market is considered a very active market with regard to switching. 30

31 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 Total Gas Market Total number of switches 93, , ,579 Switching rate 14.54% 17.38% 16.97% Table 3.5 Total Switching in Gas Switching by Customer Category The domestic market makes up 96.5% of total switching in gas. The figures below analyse the trend in switching across the domestic and IC market segments. The trend varies quite significantly across segments. In the domestic market, the total number of switches in 2012 was 106,712. In the IC market, total switches were 3,867 and the level of switching varied significantly across the year. 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Figure 3.9 Switching in the Gas Domestic Sector Figure 3.10 Switching in the Gas IC Sector The switching rate in the domestic market was 16.97% and in the IC market was over 17%. While this is the case, total switching has declined in both market segments since Gas Market Segment Domestic IC Total number of switches ,712 3,867 % change in total switching % % Switching rate, % 17.1% Table 3.6 Switching in Gas by Market Segment in Net Switching by Supplier The data shows that, similar to the electricity market, Bord Gáis Energy consistently experienced a net loss in customer numbers in On the other hand, Electric Ireland experienced an increasing gain in 2012, and has experienced a gain since it entered the market in March After experiencing significant gains in both 2010 and 2011, Airtricity experienced a net loss of 10,270 customers in

32 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June ,000 10,000 5, ,000-10,000-15,000 Airtricity Bord Gáis Energy Electric Ireland Energia Flogas Gazprom Phoenix Vayu Figure 3.11 Net Switching in Gas by Supplier, January 2010-December 2012 The table below outlines the net switching levels across suppliers over time. In 2012, Bord Gáis Energy experienced the highest net loss in customers (of 47,524 customers) and Electric Ireland experienced the highest net gain (of 50,122 customers). Flogas experienced a consistent gain throughout Energia had a volatile year, but experienced a net loss overall. Airtricity Bord Gáis Energy Electric Ireland Energia Flogas Gazprom Phoenix Vayu Q ,939-13,168 7, , Q ,879 8, , Q ,567-9,901 12, , Q ,892-10,913 13, , Q ,027-14,831 15, , ,883-75,744 28, , ,270-47,524 50, , Table 3.7 Net Switching in Gas by Supplier, Q Q 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 13. The figure below shows the trend in new registrations by supplier since January New registrations in gas have decreased by 15% since There were 6,532 new registrations in total in 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. 32

33 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June , Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Figure 3.12 New Registrations in Gas by Supplier, January 2010-December 2012 Bord Gáis Energy continues to be the supplier associated with the majority of new registrations in the gas market. However, Bord Gáis Energy s share of new registrations has declined by over 3.5% since Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Total Q , ,436 Q , ,389 Q , ,502 Q , , , ,532 % share % 77.73% 7.58% 7.93% 1.22% 0.38% 100% % share % 74.10% 9.34% 8.28% 1.13% 0.52% 100% Table 3.8 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. However, that the level of switching in electricity appears to be stabilising. The total number of switches completed in the electricity market in 2012 was 252,056. This represented a decline in the total number since 2011 of 25%. The total number of switches complete in the gas market in 2012 was 110,579. This represented a decline in the total number since 2011 of 2%. 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 in electricity was 252,056 and in gas the total number of switches was 110,579 in Switches in the domestic market made up 85% and 96.5% of total switching in electricity and gas respectively. Electric Ireland experienced the highest net gain in both the electricity and gas markets and Bord Gáis Energy experienced the highest net loss in both markets. 33

34 4.0 Competition and Deregulation 4.1 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 currently remains subject to regulation) is the domestic NDM retail gas market. 4.2 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 2012, Electric Ireland s market share (MWh), at 59.6%,was still below the threshold of 60% which was set out in the electricity Roadmap. 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 10.6% the switching rate in the domestic market remains above 10%, however is significantly lower than the rate in 2011 (15.14%). Electric Ireland is approaching the 60% market share that was the threshold for deregulation and the switching rate is only slightly above the 10% as required for deregulation. The CER commits to continue to monitor the market and, as outlined in the recent NDM decision paper, should it feel that customers are being harmed, the CER will use its regulatory powers to intervene and improve matters. 4.3 Deregulation in Gas The gas business markets were fully deregulated in October The domestic NDM retail gas market remains regulated. 34

35 A decision paper CER 13/096 NDM Retail Market Review was published in early 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 2012, 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 65.65% was above the required threshold of 60% with rebranding (defined in terms of customer numbers in the gas market 14 ). 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 17% at the end of 2012 this was been met. Assuming a similar rate of attrition in share of customers as was experienced in 2012, it would be expected that Bord Gáis Energy will reach the thresholds within the next 12 months. The CER is continuing to monitor the development of competition in the domestic gas market. 14 The threshold is set at 55% without rebranding. 35

36 5.0 Customer Protection, Debt and Disconnections 5.1 Introduction Over the past number of years, the growth in the number of customers in financial difficulty has had a knock-on impact on the level of customer debt and arrears in the energy sector. In order to protect customers a number of measures have been put in place over the past few years. 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 prepayment solution (a pay-as-you-go solution has been in place in gas since 2008 and in electricity since 2010) to customers in advance of proceeding to disconnect. Suppliers must also facilitate a customer that wishes to nominate a third party to represent them. 15 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. Debt flagging sees a flag being raised where a customer requests to switch supplier if they have a debt above a certain amount. The new supplier can then choose to accept or reject the switch request. There are clear guidelines for suppliers in place in the areas of disconnections, PAYG meters and debt flagging. The requirements set out in suppliers codes of practice ensure that transparent, fair and robust customer processes are in place. In 2012 the CER published a decision paper, CER/12/081, on the Supplier Handbook for suppliers of electricity and gas, which set out the minimum service levels that supplier must provide their customers with. The Supplier Handbook covers all key areas of customer supplier interaction, including; billing, disconnection, marketing and customer sign-up. 5.2 Debt Flagging 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 16. 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. 15 e.g. money advisor including MABS, a recognised charity or Social Welfare Representative. 16 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. 36

37 The table below shows the number of debt flagged change of supplier requests that were raised in the electricity market in There were 4,746 debt flags raised on change of supplier requests in the electricity market in 2012, corresponding to approximately 1.9% of all change of supplier requests. Approximately 45% of debt flagged change of supplier requests were cancelled by the new supplier in Total Debt Flags Debt Flagged CoS requests as % Total CoS 17 % of Debt Flagged CoS Requests Cancelled by New Supplier Jan % 47.1% Feb % 54.6% Mar % 70.1% Apr % 38.8% May % 63.6% Jun % 55.7% Jul % 37.4% Aug % 49.6% Sept % 42.1% Oct % 41.8% Nov % 19.2% Dec % 33.3% , % % Table 5.1 Debt Flagging in Electricity, Jan 2012-December 2012 The table below shows the total number of debt flags raised in the gas market in There were 829 debt flags raised in the gas market in 2012 (corresponding to 0.6% of completed gas switches). Over 51% of gas debt flagged CoS requests were cancelled by the new supplier in Total Debt Flags Debt Flagged CoS requests as % Total CoS 19 % of Debt Flagged CoS Requests Cancelled by New Supplier Jan % 47.1% Feb % 48.8% Mar % 46.3% Apr % 53.9% May % 44.1% Jun % 56.6% Jul % 37.0% Aug % 55.5% Sept % 61.7% Oct % 59.0% Nov % 63.3% Dec % 46.7% % 51.5% Table 5.2 Debt Flagging in Gas, Jan 2012-December 2012 CER are currently undertaking a review of the monetary thresholds in debt flagging 17 This data is based on the number of debt flags raised as a proportion of switching requests. 18 Average over This data is based on the number of debt flags raised as a proportion of completed switches. 37

38 5.3 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 Airtricity provide PAYG meters in the electricity and gas domestic markets. Other suppliers in the prepayment area are PrePay Power 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. 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 14,713 electricity PAYG meters installed in 2012 (with 4,248 installed in Q4). Over the course of 2012 there was an upward trend in the number of meters installed. Electricity PAYG Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Cumulative total na 711 2,485 3,596 4,384 4,248 15,424 (Since Oct 11) 20 Gas 5,445 8,118 3,276 3,491 3,431 2,532 Approx. 66,000 (total PAYG 21 including old meters & keypad) Table 5.3 PAYG Meter Installations Electricity and Gas, Q Q In gas there were 12,730 prepayment meters installed in Some 2,532 prepayment meters were installed in Q4 2012, of which 87% were installed for financial hardship reasons. This proportion represents a reduction on the percentage that were installed for financial hardship in the previous quarter (93%). The number that was installed for financial hardship declined in the second half of The following charts show the trend per month in the number of PAYG meters installed. 20 Plus there were approximately 18,000 token meters in place. 21 Includes financial hardship and lifestyle choice PAYG meters fitted by BGN at the request of gas suppliers. 22 This data only includes the meters that were installed for reasons of financial difficulty. Other types of meters are not included. 38

39 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June ,000 1,800 1,600 1,400 1,200 1, , ,201 1,426 1,448 1,477 1,459 1,564 1,665 1,019 Figure 5.1 Electricity PAYG Meters installed, October 2011-December 2012 The charts show that in electricity the number of 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 2012 was significantly lower than the numbers installed in the same period 2011, however the numbers installed per month has remained relatively steady throughout ,000 3,500 3,000 2,500 2,000 1,500 1, ,593 1,473 2,287 1,836 1,595 1,288 2,562 3,658 3,423 1,107 1,168 1,175 1,223 1,207 1,017 1,091 1,156 1,093 1,0681, Figure 5.2 Gas PAYG Meters installed, October 2011-December 2012 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. 5.4 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. 39

40 5.4.1 Disconnections Electricity Market CER receives data on electricity disconnections that were completed for nonpayment of account reasons on a weekly basis from ESBN 23. This section analyses the data on electricity non-payment of account (NPA) disconnections. Electricity disconnections have declined in the full year 2012 since 2011, by almost 2%. Electric Ireland continues to complete the majority of NPA disconnections; however, their NPA disconnections are decreasing. Domestic NPA disconnections are making up an increasing proportion of the total NPA disconnections, 84% in 2012 compared to 81.5% in In general, the level of disconnections of electricity customers has increased significantly since 2008 (total NPA disconnections were 10,986). This is attributed to the increase in the number of customers in arrears since Electric Ireland Airtricity Bord Gáis Energy Energia Total % Of total that are in the domestic market Q , , % Q ,389 1, , % Q ,894 2, , % Q ,191 1, , % Q ,658 1, , % Q ,248 1, , % Q ,971 1, , % Q , , % % Change Q Q % -61.9% -11% +6.9% +16% ,525 6,393 2, , % ,197 6,110 3, , % % Change % -4.43% +59% -6.6% -1.98% Table 5.4 Total Electricity Disconnections by Supplier, Q Q While total NPA disconnections have decreased between the full year 2011 and 2012 (by 1.98%, see table above), domestic NPA disconnections (table below) have increased slightly in the same period, by 0.98%. This was driven by an increase in the number of domestic NPA disconnections by Bord Gáis Energy. Electric Ireland and Airtricity have both reduced the number of domestic NPA disconnections in The reduction in supplier s disconnections can be explained by the installation of electricity PAYG meters. 23 This data has been validated by suppliers in advance of publication. 40

41 Electric Ireland Airtricity Bord Gáis Energy Total Domestic Q , ,548 Q ,125 1, ,540 Q ,629 2, ,164 Q ,076 1, , 256 Q ,326 1,158 4,177 Q ,073 1, ,963 Q ,707 1, ,496 Q , ,012 % Change Q Q % -61.6% -0.78% % ,570 5,474 1,464 14, ,336 5,378 2,934 14,650 % Change % -1.8% +100% +0.98% Table 5.5 Domestic Electricity Disconnections by Supplier, 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 disconnection Q Q Q Q Q Q Q Q Electric Ireland Airtricity Bord Gáis Energy Electric Ireland Airtricity Bord Gáis Energy Q Q Q Q Q Q Q Q % Change Q % -62.7% +15.5% Figure 5.3 & Table 5.6 Domestic Electricity Disconnections per 10,000 Customers, Q Q

42 5.4.2 Disconnections Gas Market There are three types of disconnections in gas: credit locks, disconnect meters (DMs) and street isolations (CTSRs) 24. This section only focuses on disconnections that were undertaken for NPA reasons. In 2012, total disconnections (domestic and non-domestic) in gas were 7,558, and were up to 65% higher than the number in There were increases in disconnections of customers of Bord Gáis Energy, Airtricity, Flogas and Electric Ireland in the period. Bord Gáis Energy and Energia both reduced their total NPA disconnections in Q compared to the same quarter in 2011; however, all other suppliers experienced an increase in NPA disconnections. Bord Gáis Energy Airtricity Flogas Energia Total % Of total that are in the domestic market Electric Ireland Q % Q , , % Q , , % Q % Q , , % Q , , % Q , , % Q % % Change Q Q % +138% +89% -38.1% % , , % ,503 1, , % % Change % +269% +53.7% -61% +4600% +65.7% Table 5.7 Total Gas Disconnections by Supplier, Q Q Domestic gas NPA disconnections made up approximately 93% of total disconnections in 2012, and increased by up to 82% since 2011 (see table 5.8). Increases were experienced by all suppliers. In Q Bord Gáis Energy had a decrease in the level of domestic disconnections since Q4 2011, of 10%. Some of this could be explained by the reduction in Bord Gáis Energy customer numbers in the same period (-9%). 24 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. 42

43 Bord Gáis Energy Airtricity Flogas Electric Ireland Total Domestic Q Q ,045 Q , ,623 Q Q , ,542 Q , ,187 Q , ,374 Q % Change Q Q % % +93.6% % , , ,079 1, ,006 % Change % +271% +52% +4500% +82% Table 5.8 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 70% of all domestic disconnections (in 2012), they had one of the lowest rates of disconnections in Q Flogas had the highest rate of domestic disconnections per 10,000 customers in 2012, however its rate decreased from its peak in Q and in Q4 Flogas rate was almost on par with Airtricity s Q Q Q Q Q Q Q Q Bord Gáis Energy Airtricity Flogas Electric Ireland Bord Gáis Energy Airtricity Flogas Electric Ireland Q Q Q Q Q Q Q Q % Change Q Q % % +45.3% - Figure 5.4 & Table 5.9 Domestic Gas Disconnections per 10,000 Customers, Q Q

44 % of total domestic electricity sites CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 There are a number of identified reasons for the increase in disconnections in gas and the increase in electricity that was experienced prior to The increase has coincided with the recession and increases in customer arrears and debt levels. The CER understands that suppliers have increased the volume of credit control staff, customer contacts and have also modified processes to address this issue. Suppliers attribute the increase in disconnections to these changes. The issue of vacant premises (see below) may also be significant factor in explaining the increase in disconnections Estimation of Vacant Premises 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 25 sites within a month of disconnection. Those sites that remain disconnected are assumed to be vacant. Figure 5.5 shows the trend in disconnections as a proportion of total domestic sites 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 as a proportion of total sites. 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 one month of date of disconnection and over 40% remain disconnected after one month. It is assumed that these sites are vacant. 0.18% 0.16% 0.14% 0.12% 0.10% 0.08% 0.06% 0.04% 0.02% 0.00% Disconnections less Vacant Premises as % of Domestic Sites PAYG Installs as % of Domestic Sites Disconnections plus PAYG as % of Domestic Sites Disconnections as % of Domestic Sites Figure 5.5 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. 25 Sites may be reenergised with a different supplier. 44

45 % of total domestic gas sites CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 Gas Figure 5.6 shows the trend in disconnections as a proportion of total domestic sites 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 as a proportion of total sites. In addition, similar to the case in electricity it can be seen that when proxy figures for vacant sites are removed, disconnections are significantly less. On average, over 30% of disconnected gas sites that were disconnected in 2012 and remained disconnected in It is assumed that these sites are vacant. 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% Disconnections less Vacant Premises as % of Domestic Sites PAYG Installs as % of Domestic Sites Disconnections plus PAYG as % of Domestic Sites Disconnections as % of Domestic Sites Figure 5.6 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. 5.5 Summary - Customer Debt and Disconnections Debt flagging has been in operation in the retail market since October 2011.In % of switches in the electricity markets were debt flagged, while 0.9% of switches were debt flagged in the gas markets. PAYG meters are being installed at a relatively consistent rate when compared to the previous quarter. The number of electricity PAYG meters installed increased over the course of Electricity and gas disconnections for non-payment of account are monitored on an ongoing basis by CER. Total electricity disconnections have very slightly decreased since 2011, however, gas disconnections have increased significantly since 2011 driven by increases in the number of domestic gas disconnections. The decline in electricity disconnections could be explained by the introduction of PAYG meters for customers in arrears in late In 2011, electricity disconnections had increased significantly compared to levels in 2010 and There are a number of identified reasons for the increase in gas and electricity domestic disconnections. Suppliers report that there has been an increase in customer arrears and debt levels. Suppliers have increased the volume of credit control staff, customer contacts and have also modified processes to address this issue. Suppliers attribute these changes to an increase in disconnections. The issue of vacant premises may also be significant factor in explaining the increase in disconnections. Estimated data shows that over 40% of the domestic sites in electricity that were disconnected were vacant and 30% in gas. A number of actions have been taken over the last year to address the increasing disconnection levels. There continues to be stringent obligations on suppliers to 45

46 make disconnections the last resort. The CER continues to promote the early intervention by suppliers to encourage customer engagement and uptake of payment plans and PAYG meters. 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. The CER is actively engaging with stakeholders, including St. Vincent de Paul and the Money Advice and Budgeting Service, to promote the rollout of PAYG, through improved information from suppliers and better processes for example, through the reviewing of the terms of payment plan structure. The CER will undertake an audit of suppliers Codes of Practice on Disconnections during 2013 and will work with suppliers and others to determine what further actions can be taken to reduce the level of disconnections and increase the uptake of PAYG meters and payment plans. 46

47 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. 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 has on energy prices in Ireland. The high reliance of Ireland on imported fossil fuels for electricity generation (78% in 2010) 26 results in Ireland having a high exposure to currency fluctuations. The CER in conjunction with the NIAUR (Northern Ireland Authority for Utility Regulation) 27 have jointly regulated the all-island wholesale electricity market, which 26 SEAI. Note Ireland s dependency is reducing; in 2009 it was 81%. 27 Together referred to as the Regulatory Authorities/RAs. 47

48 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. Given Ireland s location on the periphery of Europe and also the dispersed nature of its population, distribution and transport costs will represent a higher proportion of total price than in other European countries. This has a particular impact on the network price element of energy prices. 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. Other factors that impact on energy prices in Ireland are driven by government policy and include the PSO levy, the carbon tax and VAT rates. 6.2 Energy Prices in Ireland Introduction 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. Supplier 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 not published by suppliers. Four suppliers operate in both the electricity and gas market and two of these (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 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 first price comparison website was accredited in 2012: (accredited in March 2012). 29 The following outlines published SEAI data on average energy prices in Ireland 30, and S data is taken from the Eurostat website. 28 CER 12/164 Review of Non-Daily Metered Retail Gas Market. 29 A second site was accredited in May SEAI, Electricity and Gas Prices in Ireland 1 st Semester (January-June)

49 Malta Cyprus Turkey Bulgaria Greece United Kingdom Luxembourg Ireland Slovenia Netherlands Spain Finland Sweden Czech Republic Romania Poland Latvia Croatia Belgium Italy Portugal Germany Denmark Slovakia Lithuania Norway Estonia Malta United Kingdom Cyprus Greece Ireland Turkey Bulgaria Croatia Italy Spain Luxembourg Poland Finland Netherlands Austria Slovenia Latvia Lithuania Slovakia Belgium Portugal Germany Czech Republic Sweden Estonia Romania Norway Denmark CER Electricity and Gas Retail Markets Annual Report 2012 CER 13/120 June 2013 Disaggregation of Prices 31 As highlighted, end-user electricity prices comprise of a number of elements. The impact of each on the end price varies in significance. Of particular significance is the fact that Ireland relies on gas for 62% of its electricity generation. 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. The following charts show the breakdown of average electricity prices into three components: energy and supply; network costs and taxes and levies. The data for Ireland is estimated on an annual basis and published by Eurostat. 100% 80% 60% 40% 20% 0% 5% 5% 16% 13% 19% 16% 20% 17% 19% 19% 14% 22% 25% 21% 32% 27% 23% 18% 17% 18% 18% 25% 27% 15% 43% 45% 34% 27% 24% 28% 22% 25% 56% 29% 35% 33% 21% 36% 44% 35% 32% 31% 33% 36% 42% 43% 43% 51% 39% 23% 34% 43% 46% 44% 82% 23% 74% 69% 59% 55% 55% 21% 49% 48% 47% 44% 43% 42% 42% 42% 41% 41% 40% 40% 38% 36% 33% 32% 31% 31% 31% 29% 29% 23% Energy and supply Network costs Taxes and levies Figure 6.2 Disaggregated Domestic Electricity Price, Band DC, S % 80% 0% 1% 0% 3% 3% 1% 4% 4% 3% 12% 12% 8% 5% 1% 11% 9% 0% 5% 1% 12% 11% 12% 18% 22% 25% 25% 27% 27% 28% 13% 3% 0% 16% 14% 23% 29% 33% 15% 21% 24% 33% 35% 31% 39% 40% 29% 31% 60% 14% 19% 37% 49% 52% 38% 44% 40% 20% 0% 88% 85% 79% 76% 73% 71% 71% 71% 70% 67% 67% 66% 66% 66% 65% 64% 61% 59% 59% 59% 58% 53% 50% 47% 47% 46% 42% Energy and supply Network costs Non-recoverable taxes and levies Figure 6.3 Disaggregated Industrial & Commercial Electricity Price, band ICS Indicative data from Eurostat shows that energy and supply costs comprise a large proportion of the average Irish domestic and non-domestic electricity price in comparison with other EU countries (of 55% in domestic which is the 5 th highest proportion in the EU). This analysis supports the fact that fossil fuels account for a 31 Eurostat and SEAI. There is no data on the disaggregation of gas prices. 32 Source: Eurostat. 33 Source: Eurostat. 49