Electricity and Gas Retail Markets Report Q3 2018

Transcription

1 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities Electricity and Gas Retail Markets Report Q Information Paper Reference: CRU19014 Date Published: 14/02/2019

2 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities Public/ Customer Impact Statement The purpose of this report is to provide industry, consumers and interested stakeholders with relevant information 1 on the development of competition in the electricity and gas retail markets in the third quarter of Retail market monitoring forms an important part of CRU s activities. The information collected through retail market monitoring helps to inform new policy and in the assessment of existing regulations. This report is part of a suite of reports including monthly switching reports, quarterly reports, annual reports and emerging reports based on new market monitoring data which CRU began publishing in The information on the retail markets as provided in this report gives an insight into how the retail market is functioning and can highlight any specific issues that need to be addressed. This report details changes in market shares in the electricity and gas retail markets up to the end of Q and presents information about customer switching, renegotiations, prices and levels of discounts available. Trends in wholesale prices are also included in the report as increases observed in wholesale electricity and gas prices correspond to increases in retail prices the average wholesale electricity and gas prices for Q1 Q are higher than the average prices for 2017 and for The report also provides up to date information on trends in disconnections, PAYG installs and debt flagging. For any queries on this report please contact retaildata@cru.ie. Revisions Version Published Update 1 14/02/2019 Report published 1 The primary sources of data in this report are: Electricity: MRSO (Meter Registration System Operator), ESBN (ESB Networks) and Gas: GPRO (Gas Point Registration Operator), GNI (Gas Networks Ireland). Information for a number of market monitoring indicators is also provided by suppliers. 1

3 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities Table of Contents TABLE OF CONTENTS... 2 GLOSSARY OF TERMS AND ABBREVIATIONS... 5 EXECUTIVE SUMMARY... 7 KEY MESSAGES INTRODUCTION BACKGROUND CRU S ROLE IN RETAIL MARKET MONITORING RELATED DOCUMENTS ELECTRICITY AND GAS RETAIL PRICES WHOLESALE ENERGY PRICES DOMESTIC ELECTRICITY PRICES DOMESTIC GAS PRICES DOMESTIC DUAL FUEL PRICES CHANGES IN STANDING CHARGES AND UNIT CHARGES OVER TIME NUMBER OF CUSTOMERS ON DIFFERENT PLANS ELECTRICITY NUMBER OF CUSTOMERS ON DIFFERENT PLANS- GAS NUMBER OF CUSTOMERS DEFAULTING TO STANDARD TARIFFS FEATURES OF PLANS SUMMARY ELECTRICITY AND GAS RETAIL PRICES MARKET SHARE DOMESTIC ELECTRICITY DOMESTIC ELECTRICITY MARKET SHARE BY CUSTOMER NUMBERS AND MWHS SUMMARY MARKET SHARE DOMESTIC ELECTRICITY MARKET SHARE WHOLESALE ELECTRICITY SUMMARY MARKET SHARE WHOLESALE ELECTRICITY MARKET SHARE DOMESTIC GAS DOMESTIC GAS MARKET SHARE BY CUSTOMER NUMBERS AND GWHS SUMMARY MARKET SHARE DOMESTIC GAS CUSTOMER SWITCHING AND RENEGOTIATIONS ELECTRICITY, GAS AND DUAL FUEL SWITCHING IN Q RENEGOTIATIONS

4 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities 5.3 SUMMARY CUSTOMER SWITCHING AND RENEGOTIATIONS FINANCIAL HARDSHIP PAYG SUMMARY FINANCIAL HARDSHIP PAYG DEBT FLAGGING SUMMARY DEBT FLAGGING DISCONNECTIONS DISCONNECTIONS TOTAL DISCONNECTIONS - ELECTRICITY MARKET DISCONNECTIONS - GAS MARKET SUMMARY DISCONNECTIONS ARREARS AND PAYMENT PLANS SUMMARY ARREARS AND PAYMENT PLANS BUSINESS ELECTRICITY AND GAS COST COMPONENTS ELECTRICITY GAS BUSINESS ELECTRICITY AND GAS PLANS AND PRICES SMALL BUSINESS ELECTRICITY PRICES IC GAS PRICES EUROSTAT NON-DOMESTIC ELECTRICITY AND GAS PRICES SUMMARY BUSINESS ELECTRICITY MARKET SHARE SMALL BUSINESS ELECTRICITY MARKET SHARE BY CUSTOMER NUMBERS AND MWHS MEDIUM BUSINESS ELECTRICITY MARKET SHARE BY CUSTOMER NUMBERS AND MWHS LARGE ENERGY USERS ELECTRICITY MARKET SHARE BY CUSTOMER NUMBERS AND MWHS BUSINESS GAS MARKET SHARE INDUSTRIAL AND COMMERCIAL GAS MARKET SHARE BY CUSTOMER NUMBERS AND GWHS MEDIUM SIZED NON-DOMESTIC MARKET SHARE BY CUSTOMER NUMBERS AND GWHS DM MARKET SHARE BY CUSTOMER NUMBERS AND GWHS LDM MARKET SHARE BY CUSTOMER NUMBERS AND GWHS MARKET CONCENTRATION ELECTRICITY MARKET SEGMENTS GAS MARKET SEGMENTS

5 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities 15. NON-DOMESTIC DISCONNECTIONS CONCLUSION ANNEX 1 OVERVIEW OF ELECTRICITY PASS THROUGH COSTS AND CHARGES FOR 2017/ ELECTRICITY MARKET SEGMENTS CONSUMPTION OVERVIEW OF CHARGES GENERATION CHARGES NETWORK CHARGES PUBLIC SERVICE OBLIGATION LEVY (PSO) ELECTRICITY TAX ANNEX 2 OVERVIEW OF GAS PASS THROUGH CHARGES AND COSTS FOR 2017/ GAS MARKET SEGMENTS CONSUMPTION NETWORK CHARGES CARBON TAX ANNEX 3 CHARGES IN THE BUSINESS MARKETS DEVELOPMENTS SECTION

6 Glossary of Terms and Abbreviations Abbreviation or Term AQ BGE CfD CoS CRU CTSR DLAF DM DMs DUoS ESBN FVT GNI GPRN GWhs HHI IC I-SEM kwhs LDM Definition or Meaning Annual Quantity Bord Gáis Energy Contract for Difference Change of Supplier Commission for Regulation of Utilities Street Isolation Distribution Loss Adjustment Factor Daily Metered Disconnect Meters Distribution Use of System ESB Networks Fuel-Variation Tariff Gas Networks Ireland Gas Point Reference Number Gigawatt Hours Herfindahl-Hirschman Index Industrial/Commercial Integrated Single Electricity Market Kilowatt Hours Large Daily Metered 5

7 LEU MPRN MWhs NBP NDM NIAUR NPA PAYG PSO RTF SEAI SEM SEMO SMP SPC TUoS Large Energy Users Meter Point Reference Number Megawatt Hours National Balancing Point Non-Daily Metered Northern Ireland Authority for Utility Regulation Non-Payment of Account Pay As You Go Public Service Obligation Regulated Tariff Formula Sustainable Energy Authority of Ireland Single Electricity Market Single Energy Market Operator System Marginal Price Supply Point Capacity Transmission Use of System 6

8 Executive Summary Retail market monitoring forms an important part of the CRU s activities. The information gleaned through market monitoring helps to inform new policy and aids in the assessment of existing regulations. The information and analysis provided in this report aims to provide insight into how the electricity and gas retail markets are functioning and to highlight any specific issues that may need to be addressed. The purpose of this quarterly report is to provide consumers, industry and other interested stakeholders with relevant information on the key developments in the electricity and gas retail markets in Q The report draws on a range of data sources from the past quarter and provides an overview of the electricity and gas retail markets. The report begins with an overview of electricity and gas retail prices, including the components of customers bills and final retail prices. The next section of the report presents domestic market developments with regard to the status of suppliers shares in the domestic market segments, and customer engagement in terms of switching. The next part of the report focuses on consumer protection through an analysis of Pay As You Go (PAYG) meters, effective debt flagging 2 processes, disconnections, and arrears and payment plans. The final section of the report presents business market developments during Q in terms of business electricity and gas cost components, plans and prices, the status of suppliers market share in the business segments, metrics of market concentration, and non-domestic disconnections. The key messages from the Q Report are outlined in the next section. 2 When a customer requests to change to a new supplier, the existing supplier has the facility to inform the new supplier of outstanding debt if it is above the industry thresholds approved by the CRU. The new supplier can then choose whether to proceed with or cancel the change of supplier (CoS) request where this flag has been raised. 7

9 Key Messages Electricity and Gas Prices A total of 7 suppliers announced price increases in the first half of 2018, based on increased wholesale costs and regulated charges. Four suppliers have announced further price increases (one supplier at the end of Q and three suppliers during Q4 2018) becoming effective in Q Supplier s increases and effective dates for tariff changes are outlined in this report. The All-Island wholesale electricity price (System Marginal Price, SMP) from 2012 to June 2018 is presented in this report. Between January and September 2018, the average SMP price was 32% higher than the average price during the same period in 2017 and 50% higher than the average price during the same period in The wholesale gas price at the UK trading hub, which sets the wholesale gas price in Ireland, also increased in 2017 and As of September 2018, the average price of gas for 2018 was 40% higher than the average price during the same period in 2017, and 58% higher than the average price during the same period in In September 2018, the least expensive estimated annual bill in electricity (based on typical consumption of 4,200kWhs) for a standard plan was with BeEnergy at The least expensive discounted plan was with Energia with an estimated annual bill of The least expensive estimated annual bill for a standard plan in gas (based on typical annual consumption of 11,000kWhs) was with Just Energy at The least expensive discounted plan was with Just Energy with an estimated annual bill of In 2018 Electric Ireland, Energia, Bord Gáis Energy, Just Energy, Panda Power and SSE Airtricity offered dual fuel plans to customers with price discounts for domestic customers that avail of both services from the same supplier. The least expensive dual fuel offer was with Energia with an estimated annual bill of 1, Market Share Domestic Electricity End of Q3 2018, Electric Ireland had the largest domestic electricity market share, with 48.01% of the market in terms of consumption, with its market share continuing to fall slowly. This was followed by Bord Gáis Energy with 18.69%, SSE Airtricity with 13.80%, Energia with 8.66%, PrePayPower with 6.52%, Panda with 2.27% and Pinergy with 1.35% was the first year that Electric Ireland s share fell below 50%, and it stayed below this level in Q

10 Between Q and Q3 2018, SSE Airtricity s market share decreased by 1.93% in terms of consumption. PrePay Power increased its market share by 1.43%, the largest increase during the period. Market Share Domestic Gas End of Q3 2018, Bord Gáis Energy had the largest market share in terms of customer numbers, with 45.50% of the domestic gas market, followed by Electric Ireland with 20.86%, SSE Airtricity with 13.44%, Energia with 7.99%, PrePayPower with 5.97% and Flogas with 4.26%. Between Q and Q Bord Gáis Energy lost 2.76% of market share in terms of customer numbers. PrePayPower increased its market share by 2.34%. Switching and Renegotiations The total number of customers switching in electricity was 78,013 in Q This represented a decrease in switching of 4.41% from Q2 2018, where there were 81,615 switches. The total number of customers switching in gas was 34,155 in Q This represented a decrease in switching of 0.55% from Q2 2018, during which time there were 34,343 customer switches. In Q dual fuel switches represented 33% of total switches. The total number of internal switches/renegotiations in domestic electricity in Q was 46,138 (2.23%). This is an increase of 0.016% on the Q figure of 45,377. The total number of internal switches/renegotiations in domestic gas in Q was 16,265 (1.18%), compared to 15,667 in Q (4% increase from Q2 2018). 5.62% of electricity and 7.45% of gas customers looked for a better energy plan in Q through either switching supplier or renegotiating with their current supplier. This represents a decrease of 2.92% for electricity and 0.23% for gas compared to Q and an increase of 2.84% for electricity and 10.08% for gas compared to Q

11 Financial Hardship PAYG and Debt Flagging The total number of electricity PAYG financial hardship installs in Q was 653 compared to 965 in Q The total number of gas PAYG installs in Q was 1, % of these were for financial hardship reasons. In the same period in 2017, 1,937 were installed, with 18.02% for financial hardship reasons. This indicates that the installs were being driven by lifestyle choice customers. There were 575 debt flags raised in the electricity market in Q3 2018, corresponding to approximately 0.74% of all electricity Change of Supplier (CoS) requests in the quarter. This represents a 9.9% increase from Q debt flagged CoS requests were cancelled in the electricity market in Q3 2018, which means that 26% of debt flags resulted in a CoS request being cancelled. There were 614 debt flags raised in the gas market in Q3 2018, corresponding to approximately 1.8% of all gas CoS requests in that quarter. This represents a 12% increase from Q debt flagged CoS requests were cancelled in the gas market in Q2 2018, which means that 48% of debt flags resulted in a CoS request being cancelled. Domestic Electricity and Gas Disconnections The total number of disconnections in Q was 1,337 for electricity and 579 for gas. Between Q and Q3 2018, the total number of electricity disconnections have increased by 9% and the total number of gas disconnections have increased by 5.9%. Arrears and Payment Plans Between 11% and 23% of customers across all segments were in arrears in Q Of those customers in arrears, 40% (electricity) and 47% (gas) were in arrears for excess of 90 days. The percentage of total customers per market segment on payment plans is 0.58% for domestic electricity and 0.37% for domestic gas indicating that 11,961 electricity customers and 2,483 gas customers are on payment plans. 10

12 Generally, more payment plans are completed by electricity and gas customers than broken. Market Share Non-Domestic Electricity and Gas At the end of Q3 2018, Electric Ireland had the largest share of the small business electricity market in terms of consumption with 34.54%, and of the medium business electricity market with 41.75%, while SSE Airtricity held the largest share in the LEU market with 30.66%. SSE Airtricity moved to having the largest share in the LEU market for the first time in Q and this continued into Q2 and Q At the end of Q3 2018, Bord Gáis Energy had the largest share in all non-domestic market segments in terms of customer numbers - with 42.19% in the IC market, 28.87% in the medium sized non-domestic market, 24.36% in the DM market and 52.63% in the LDM market. Non-Domestic Electricity and Gas Disconnections The total number of non-domestic disconnections in Q was 304 for electricity and 70 for gas. 11

13 1. Introduction 1.1 Background CRU s Role in Retail Market Monitoring The Commission for Regulation of Utilities (CRU) is Ireland s independent energy and water regulator. CRU was established in 1999 and now has a wide range of economic, customer protection and safety responsibilities in energy. CRU is also the regulator of Ireland s public water and wastewater system. CRU s primary economic responsibilities in energy cover electricity generation, electricity and gas networks, and electricity and gas supply activities. The overall aim of CRU s economic role is to protect the interests of energy customers. CRU has an important related function in customer protection by resolving complaints that customers have with energy companies. CRU s core focus in safety is to protect lives and property across a range of areas in the energy sector. In 2014 CRU was appointed as Ireland's economic regulator of the Irish public water and wastewater sector. CRU has an important statutory role to protect energy consumers and to monitor the electricity and gas retail markets to ensure that customers are benefitting from competition. A key strategic goal of CRU is to protect consumers, so they can benefit from competition through fully competitive wholesale and retail markets. Retail market monitoring forms an important part of CRU s activities, in terms of providing oversight of the market, informing new policy and assessing existing regulations. Electricity and gas retail market reports are published by CRU on a quarterly basis and provide information on trends in prices, switching, market share, and customer protection. The aim of these reports is to provide an overview of competition in the electricity and gas retail markets and provide consumers, industry and relevant stakeholders with information over time Related Documents Further information on CRU s role and relevant legislation can be found on CRU s website at 12

14 ELECTRICITY AND GAS RETAIL PRICES ELECTRICITY AND GAS RETAIL PRICES 13

15 ELECTRICITY AND GAS RETAIL PRICES 2. Electricity and Gas Retail Prices This section outlines the range of plans offered by suppliers from July 2018 to September 2018 for domestic electricity, gas and dual fuel customers, including their standard and highest discounted plans. All information presented here is publicly available on price comparison and individual supplier websites. There are a large number of plans available to domestic and business customers. These plans offer customers different tariffs comprised of standing and unit charges (and in some instances other charges). Suppliers can also offer different rates depending on the payment or billing methods of customers (e.g. paperless, online, direct debit etc.). All suppliers are required to publish details of tariff plans that are available to domestic customers. Suppliers of commercial customers often provide bespoke plans and information on such plans is generally not published by suppliers. Some suppliers also offer standard plans to business customers. The first part of this section provides comparisons between suppliers for their standard and discounted plans in gas and electricity, and details price changes by suppliers in Q This is followed by analysis of new data received by the CRU from suppliers. Data on the top ten electricity, gas and dual fuel plans per supplier in terms of customer numbers is provided to the CRU on a quarterly basis. This includes information on the price components of each plan, discounts, consumption and customer numbers and has been used for analysis of the number of customers on different levels of discounts and standard plans. It should be noted that this does not represent all customers in the market as suppliers may have more than ten plans which are not reported under the new market monitoring framework. Price comparison websites are useful tools for customers to compare prices across suppliers. CRU has an accreditation framework which reviews the energy price comparison service provided by websites and only accredits a site if it meets defined standards for accuracy, transparency and reliability. There are two CRU accredited price comparison websites: and Between Q and Q3 2018, a number of price increases were announced across different suppliers and in addition the 2017/18 PSO levy came into effect. There are a number of drivers for these price increases, including increased wholesale electricity and gas prices in 2017 and 2018 and increases in pass through costs in electricity. Between the 2016/17 and 2017/18 tariff year, total regulated costs (including transmission and distribution charges and market operator charges) have increased by approximately 3.33%. The dates of announcements and their effective dates impacting on final prices are outlined below. 14

16 ELECTRICITY AND GAS RETAIL PRICES Supplier Price Change Details Effective date Pinergy A price increase for electricity of 5.6% was announced on the 1 st of November A price increase of 9.38% for electricity was announced on the 12 th of July A price increase of 5.68% for electricity was announced on the 8 th of October st December st August th November 2018 Flogas A price increase for gas of 3.3% was announced on the 1 st of November A price increase of 12.8% for gas was announced on the 12 th of July A price increase of 9.8% for gas was announced on the 27 th of September st December st August st November 2018 Energia A price increase for electricity of 3.9% was announced on the 27 th of October A price increase for electricity of 7.6% and for gas of 12.38% was announced on the 29 th of June A price increase for electricity of 5.5% and for gas of 6.3% was announced on the 16 th of November st December st August st January 2019 Bord Gáis Energy PrePayPower SSE Airtricity A price increase of 3.4% for gas and 5.9% for electricity was announced on the 29 th of September A price increase of 4.7% for gas and 5.8% for electricity was announced on the 6 th July A price increase of 0.09 cent a day ( 2.83 a month) was announced on the 31 st of October A price increase of 6.6% for electricity and 7.5% for gas was announced on the 3 rd of July A price increase of 5.6% for electricity was announced on the 29 th of September A price increase of 12.3% on gas tariffs and 6.4% on electricity tariffs was announced on the 14 th of June st November th August st December rd August st November th July 2018 A price increase of 6.9% on gas tariffs and 6.3% on electricity tariffs was 3 rd December

17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 SMP Euro/MWh ELECTRICITY AND GAS RETAIL PRICES announced on the 2 nd of November Electric Ireland A price increase of 4% for electricity was announced on the 6 th of October A price increase of 6.2% in electricity and 8% in gas was announced on the 27 th of June st February st August Wholesale Energy Prices The wholesale electricity market in Ireland is jointly regulated by the CRU and the Northern Ireland Authority for Utility Regulation (NIAUR). This market is known as the Single Electricity Market or SEM. The SEM includes a centralised liquid spot market where electricity is bought and sold. Suppliers purchase their requirements in half hour periods and pay the System Marginal Price (SMP) in each half hour. Between January and September 2018, the average SMP price for 2018 was 32% higher than the average price during the same period in 2017 and 50% higher than the average price during the same period in For electricity the average SMP is per MWh in 2018 (between January and September). For the same period in 2017, the average price was per MWh, whereas for the same period in 2016 it was per MWh. The figure below shows the average monthly price of electricity in the SEM between 2014 and 2018, along with the average price across each year. SMP /MWh SMP Figure 2.1: SMP /MWh (Jan 2012 September 2018) 16

18 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Gas Euro/therm ELECTRICITY AND GAS RETAIL PRICES The National Balancing Point (NBP) is the trading hub for gas in Britain and sets the Irish wholesale gas price. The price of gas on the NBP in pence per therm of gas increased towards the end of 2017 and Q As of September 2018, the average price of gas for 2018 was 40% higher than the average price during the same period in 2017, and 58% higher than the average price during the same period in The figure below shows the change in average monthly day ahead gas prices over time at the NBP. It also shows the average price between 2014 and NBP Day Ahead Gas ( /therm) NBP Figure 2.2: NBP Day Ahead Gas ( /therm) (Jan 2012 September 2018) The period January to September 2018 average for NBP gas (Day-ahead) is 67 cent/therm in For 2017, the average NBP price was 51 cent/therm. For 2016 the average was 42 cent/therm. 2.2 Domestic Electricity Prices In order for a domestic electricity customer to accurately compare prices between suppliers, the comparison of the estimated annual bill using the current typical consumption value of 4,200kWhs across suppliers, is the best measure. In Q there were seven suppliers offering both standard and discounted plans for domestic electricity, along with PrePayPower and Pinergy who offered PAYG plans exclusively. BEenergy entered the domestic electricity market in Q offering 24 hour and night saver tariffs. Note that the estimated annual bill for Lifestyle Choice PAYG customers includes an additional supplier service charge which is reflected in the price. 17

19 ELECTRICITY AND GAS RETAIL PRICES BeEnergy offered the cheapest standard domestic estimated annual bill at the end of Q BeEnergy is a new supplier having entered the market in This highlights the benefits of new entrants into the market for customer prices. The most competitive discounted estimated annual bill at the end of Q was offered by Energia. Standard Domestic Electricity Estimated Annual Bills (based on typical annual consumption of 4,200 kwhs) June 2018 September 2018 Electric Ireland 1, , Energia 1, , Bord Gáis Energy 1, , SSE Airtricity 1, , Panda power 1, , Just Energy , BEenergy PAYG Plans PrePayPower 1, , Pinergy 1, , Electric Ireland 1, , Table 2.1: Standard Domestic Electricity Annual Average Bills Most Competitive Discounted Domestic Electricity Estimated Annual Bills (based on typical annual consumption of 4,200 kwhs) June 2018 September 2018 Electric Ireland , Energia Bord Gáis Energy SSE Airtricity Panda power Just Energy BEenergy PAYG Plans PrePayPower 1, , Pinergy 1, , Electric Ireland 1, , Table 2.2: Most Competitive Discounted Domestic Electricity Estimated Annual Bills 2.3 Domestic Gas Prices In order for a domestic gas customer to accurately compare prices between suppliers, the comparison of the estimated annual bill using the current typical consumption value of 11,000kWhs across suppliers, is the best measure. In Q there were seven suppliers offering both standard and discounted plans for domestic gas, Flogas and BGE also offered PAYG plans. Note that some gas suppliers charge an installation fee for PAYG gas meters which is not included here. 18

20 ELECTRICITY AND GAS RETAIL PRICES Just Energy offered the cheapest standard domestic estimated annual bill at the end of Q Just Energy is a new supplier having entered the market in As in the case of electricity, this highlights the benefits of new entrants into the market for customer prices. The most competitive discounted estimated annual bill at the end of Q was offered by Just Energy. Standard Domestic Gas Estimated Annual Bills (based on typical annual consumption of 11,000 kwhs) June 2018 September 2018 Electric Ireland Energia Bord Gáis Energy Flogas Just Energy SSE Airtricity Panda Power PAYG Plans Flogas Bord Gáis Energy PrePayPower Table 2.3: Standard Domestic Gas Estimated Annual Bills Most Competitive Discounted Domestic Gas Estimated Annual Bills (based on typical annual consumption of 11,000 kwhs) Gas June 2018 September 2018 Electric Ireland Energia Bord Gáis Energy Flogas Just Energy SSE Airtricity Panda Power Table 2.4: Most Competitive Discounted Domestic Gas Estimated Annual Bills 2.4 Domestic Dual Fuel Prices In Q Electric Ireland, Energia, Bord Gáis Energy, SSE Airtricity, Just Energy, PrePayPower, and Panda Power offered dual fuel plans to customers with price discounts for domestic customers that avail of both services from the same supplier. Energia offered the cheapest dual fuel estimated annual bill at the end of Q Two new suppliers entered the duel fuel market in 2017, improving customer choice in this segment. Highest Discounted Dual Fuel Estimated Annual Bills June 2018 September 2018 Electric Ireland 1, , Energia 1, , Bord Gáis Energy 1,

21 c/kwh ELECTRICITY AND GAS RETAIL PRICES SSE Airtricity 1, , Just Energy 1, , PrePayPower 1, , Panda Power 1, , Table 2.5: Highest Discounted Dual Fuel Estimated Annual Bills 2.5 Changes in Standing Charges and Unit Charges over Time Final electricity and gas bills are made up of a number of components; standing charges and unit rates are charged and some suppliers may also levy other charges such as those associated with pre-payment meters. Standing charges for electricity and gas plans have not changed significantly over time. For electricity, they have fluctuated between an average of approximately 34c per day and 37c per day 3 depending on the supplier. These charges should be seen in tandem with any other recurring fixed charge that a supplier may charge customers. Competition and discounts are usually associated with the unit charge for supplier s plans. Figures show the changes in electricity and gas standard and discount unit rates over time per supplier and do not take into account standing charges or any other charges that a supplier may charge customers. Overall for standard and discounted plans in both markets, unit rates have increased from the end of 2017 and Q Electricity standard unit rate over time Electric Ireland SSE Airtricity Bord Gais Energy Energia PrePayPower Pinergy Figure 2.3: Electricity standard unit rate over time 3 This average excludes the standing charges associated with PAYG plans as additional service charges are also included. 20

22 c/kwh c/kwh c/kwh ELECTRICITY AND GAS RETAIL PRICES Electricity discount unit rate over time Electric Ireland SSE Airtricity Bord Gais Energy Energia PrePayPower Pinergy Panda Figure 2.4: Electricity discount unit rate over time Gas standard unit rate overtime Electric Ireland SSE Airtricity Bord Gais Energy Energia Flogas Figure 2.5: Gas standard unit rate over time Gas discount unit rate over time Electric Ireland SSE Airtricity Bord Gais Energy Energia Flogas Figure 2.6: Gas discount unit rate over time 21

23 ELECTRICITY AND GAS RETAIL PRICES 2.6 Number of Customers on Different Plans Electricity Under CRU s extended market monitoring framework, data on the top ten contracts for each supplier in terms of customer numbers is submitted to the CRU on a quarterly basis. This includes data on the number of customers on each plan, the unit charge and standing charge, total consumption for the period, the features of each plan and the annual average bill. This analysis does not include all customers in the market but provides a good indication of the number of customers on the top ten plans in the market. Number of customers reported on top 10 plans for Q Electricity Gas 1,709, ,980 Total number of customers in the market 2,070, ,700 % of total customers 83% 56% Table 2.6: Customers on top 10 plans, Q This section presents some analysis carried out with data for Q3 2018, looking at the proportion of customers on different ranges of plans based on their combined unit and standing charges compiled from information collected from suppliers on their top 10 plans. The annual average bills presented here are based on 4,200kWh of consumption. 80% 70% 60% 50% 40% 30% 20% 10% Customers on ranges of electricity bills (pre taxes and levies, 4200kWh annual consumption) 0% ,000 1,000-1,100 Figure 2.7: Customers on ranges of electricity bills, Q Figure 2.7 shows the number of customers on a range of plans with different annual bills for Q (as reported through market monitoring). This data indicates that the majority of customers 22

24 % of customers ELECTRICITY AND GAS RETAIL PRICES in the market, covered by the top 10 plans, are on plans within the higher range of annual average bills. This information is based on data received for Q from suppliers detailing their top 10 electricity plans, based on the number of customers on each plan. This means that not every customer in the market is detailed here and the data is only representative of the market as a whole. Analysis suggests that most customers are not on the highest discounted plan available, and in many cases the discounted plans with the most customers have an annual average bill that is only slightly below that of the standard tariff bill. It is possible, however, that customers might choose their electricity or gas plan based on criteria other than charges, therefore, these non-tariff elements can also be considered important. 2.7 Number of Customers on Different Plans- Gas Customers on ranges of gas bills (pre- taxes, based on 11,000kWh consumption) 90.00% 80.00% 77% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 11% 6.90% 4% 0.60% Figure 2.8: Customers on ranges of gas bills, Q Figure 2.8 shows the % of customers on different ranges of annual average bills in Q (as reported through market monitoring). This information is based on data received for this period from suppliers detailing their top 10 gas plans, based on the number of customers on each plan. 2.8 Number of Customers Defaulting to Standard Tariffs Data is received from suppliers on a yearly basis on the overall number of customers who defaulted to standard tariffs. The indicator refers to the automatic default of a current customer at the end of a contract to a tariff that does not have a new customer discount, or a contract term associated with it. 23

25 ELECTRICITY AND GAS RETAIL PRICES Figure 2.9: % of customers defaulting to standard tariffs in 2017 % of customers defaulting to standard tariffs in 2017 Domestic Electricity Small Business Electricity Domestic Gas IC Gas % of total customers 8.90% 5.23% 8.89% 3.72% % customers who switched in the last 12 months defaulting to standard tariff 65.23% 26.54% 49.31% 18.37% Table 8.8: % of customers defaulting to standard tariffs in 2017 In 2017, approximately 65% of domestic electricity customers that had switched supplier in the last 12 months defaulted to a standard tariff, when their initial discount period ended. This amounted to 8.90% of all domestic electricity customers. Approximately 9% of domestic gas customers defaulted to standard tariffs, at the end of a discount period, amounting to 50% of domestic gas customers who switched supplier in the last 12 months. This amounted to approximately 8.9% of all domestic gas customers While this is a low percentage of customers overall, taken as a percentage of customers on fixed term discounted plans this indicates that a large number of customers who were active in the market did not renegotiate their contract or switch in This suggests low levels of repeat switching in the market. Lower numbers of business electricity and gas customers defaulted to standard tariffs, however a significant proportion of business customers negotiate bespoke contracts with suppliers. 24

26 ELECTRICITY AND GAS RETAIL PRICES 2.9 Features of Plans In 2018 there was a large variety of payment methods available and different features across different plans. Features included cash based and credit offers, green offers, loyalty schemes and device based offers. These features are listed in the table below. Energy based services/free items Climote heating control Nest learning thermostat GE Led Light Bulbs In Home Displays Boiler Services Green offers Hive Active Cashback offers & Points Discounts Payment Methods Unit Charges and Standing Charges Contract terms cashback Tesco points free top ups Access to loyalty schemes 120 credit on first or second bill 2%-20% Gas discounts 1%-26% Electricity discounts Duel fuel discount bundles PAYG Direct Debit Bank Transfer Phone Cheque An Post Standing charges do not vary widely Most discounts are off unit charges 12/24 month contract terms with exit fees Most customers default to standard tariffs Table 2.8: Features of Plans available 25

27 ELECTRICITY AND GAS RETAIL PRICES 2.10 Summary Electricity and Gas Retail Prices A total of 7 suppliers announced price increases in the first half of 2018, based on increased wholesale costs and regulated charges. Four suppliers have announced further price increases (one supplier at the end of Q and three suppliers during Q4 2018) becoming effective in Q Supplier s increases and effective dates for tariff changes are outlined in this report. The All-Island wholesale electricity price (System Marginal Price, SMP) from 2012 to June 2018 is presented in this report. Between January and September 2018, the average SMP price was 32% higher than the average price during the same period in 2017 and 50% higher than the average price during the same period in The wholesale gas price at the UK trading hub, which sets the wholesale gas price in Ireland, also increased in 2017 and As of September 2018, the average price of gas for 2018 was 40% higher than the average price during the same period in 2017, and 58% higher than the average price during the same period in In September 2018, the least expensive estimated annual bill in electricity (based on typical consumption of 4,200kWhs) for a standard plan was with BeEnergy at The least expensive discounted plan was with Energia with an estimated annual bill of The least expensive estimated annual bill for a standard plan in gas (based on typical annual consumption of 11,000kWhs) was with Just Energy at The least expensive discounted plan was with Just Energy with an estimated annual bill of In 2018 Electric Ireland, Energia, Bord Gáis Energy, Just Energy, Panda Power and SSE Airtricity offered dual fuel plans to customers with price discounts for domestic customers that avail of both services from the same supplier. The least expensive dual fuel offer was with Energia with an estimated annual bill of 1,

28 MARKET DEVELOPMENTS 27

29 MARKET DEVELOPMENTS 3. Market Share Domestic Electricity 3.1 Domestic Electricity Market Share by Customer Numbers and MWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs. The electricity market was deregulated based on market shares in terms of consumption, therefore this metric is considered to be more important for market monitoring purposes. The percentage change in market share from the last quarter and over the last year is also presented. Domestic Market Share Electric Ireland SSE Airtricity Bord Gáis Energy PrePayPower Energia Pinergy Others Panda (a) Customer Nos (b) MWhs Figure 3.1: Q Domestic Electricity Market Share (%) Q Domestic Market Share Sites MWhs Electric Ireland 1,103, ,257 SSE Airtricity 258, ,673 Bord Gáis Energy 342, ,400 PrePayPower 139, ,485 Energia 150, ,625 Pinergy 28,580 24,680 Panda 38,235 41,623 Others 10,192 12,800 Total 2,070,644 1,831,543 Table 3.1: Number of sites and MWhs per supplier 28

30 MARKET DEVELOPMENTS Domestic Customers - change in market share Q Q Q Q Sites MWhs Sites MWhs Electric Ireland -0.45% -0.69% -1.55% -1.25% SSE Airtricity -0.39% -0.48% -1.47% -1.93% Bord Gáis Energy 0.20% 0.50% 0.34% 0.34% PrePayPower 0.17% 0.39% 0.51% 0.43% Energia 0.15% -0.05% 1.16% 1.42% Pinergy 0.01% -0.09% 0.03% -0.08% Panda 0.20% 0.33% 0.62% 0.76% Others 0.11% 0.09% 0.36% 0.31% Table 3.2: % change in market share for Q Q Summary Market Share Domestic Electricity End of Q3 2018, Electric Ireland had the largest domestic electricity market share, with 48.01% of the market in terms of consumption, with its market share continuing to fall slowly. This was followed by Bord Gáis Energy with 18.69%, SSE Airtricity with 13.80%, Energia with 8.66%, PrePayPower with 6.52%, Panda with 2.27% and Pinergy with 1.35%. Between Q and Q3 2018, SSE Airtricity s market share decreased by 1.93% in terms of consumption. PrePay Power increased its market share by 1.43%, the largest increase during the period. 29

31 MARKET DEVELOPMENTS 3.3. Market Share Wholesale Electricity 4 The wholesale market is considered below for the All-Island Single Electricity market for Q The pie charts give the scheduled generation, the actual generation for electricity generators on the island of Ireland, and the interconnectors between Great Britain and the island of Ireland. 6% 12% 16% Wholesale Market Share 9% 0% 4% 5% 3% 42% 3% AES Aughinish Bord Gáis Bord na Mona ESB Interconnector SSE Tynagh Viridian Others Market Scheduled Generation Figure 3.2: Q Market Scheduled Generation 3.4 Summary Market Share Wholesale Electricity At the end of Q ESB were the largest generators of electricity in the Single Electricity Market with 42% of total generation. They were followed by SSE Airtricity with 16% and Viridian with 12%. 4 Information in this section is drawn from SEM Monitoring Reports 30

32 MARKET DEVELOPMENTS 31

33 MARKET DEVELOPMENTS 4. Market Share Domestic Gas 4.1 Domestic Gas Market Share by Customer Numbers and GWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs. The percentage change in market share from the last quarter and over the last year is also presented. Figure 4.1: Q Domestic Gas Market Share (%) Q Domestic Market Share Sites GWhs Bord Gáis Energy 303, SSE Airtricity 89, Electric Ireland 139, Flogas 28, Energia 53, Others 53, Total 667, Table 4.1: Number of sites and GWhs per supplier 32

34 MARKET DEVELOPMENTS Domestic Gaschange in market share Q Q Q Q Sites GWhs Sites GWh Bord Gáis Energy -0.41% 0.06% -2.76% -2.86% SSE Airtricity -0.34% -0.47% -0.97% -0.72% Electric Ireland -0.05% -0.58% -0.58% -0.65% Flogas -0.49% -0.70% -1.59% -1.52% Energia 0.26% 0.05% 1.57% 1.82% Others 1.02% 1.64% 4.32% 3.89% Table 4.2: % Change in Market Share 4.2 Summary Market Share Domestic Gas End of Q3 2018, Bord Gáis Energy had the largest market share in terms of customer numbers, with 45.50% of the domestic gas market, followed by Electric Ireland with 20.86%, SSE Airtricity with 13.44%, Energia with 7.99%, PrePayPower with 5.97% and Flogas with 4.26%. Between Q and Q Bord Gáis Energy lost 2.76% of market share in terms of customer numbers. PrePayPower increased its market share by 2.34%. 33

35 Net Switching MARKET DEVELOPMENTS 5. Customer Switching and Renegotiations 5.1 Electricity, Gas and Dual Fuel Switching in Q Customer switching is a key indicator of retail competition and supplier activity within the retail market. This section contains data on customer switching activity in Q Net Switching of Customers Per Supplier (July 2017 to September 2018) Electric Ireland Energia SSE Airtricity Bord Gáis Energy PrePayPower Others Pinergy Panda Figure 5.1: Overall Switching in Electricity, Q Q The total number of customers switching in electricity was 78,013 in Q3 2018, representing a 3.32% switching rate. This represented a decrease in switching of 4.41% from the previous quarter, Q2 2018, where there were 81,615 switches and a decrease in switching of 2.80% from the same quarter of the previous year (Q3 2017) where there were 80,260 switches. Month Total Number of Switches Jul-17 25,638 Aug-17 27,124 Sep-17 27,498 Oct-17 25,536 Nov-17 31,488 Dec-17 25,411 Jan-18 25,507 Feb-18 28,898 Mar-18 25,461 Apr-18 26,964 May-18 28,772 Jun-18 25,879 Jul-18 24,963 Aug-18 27,584 Sep-18 25,466 Table 5.1: Total Monthly Switches in Electricity, Q Q

36 Net Switiching MARKET DEVELOPMENTS Net Switiching of Customers per Supplier (July 2017 to September 2018) 3,000 2,000 1, ,000-2,000-3,000-4,000 SSE Airtricity Bord Gáis Energy Electric Ireland Energia Flogas Gazprom VAYU PrePayPower Just Energy Panda Power Figure 5.2: Overall Switching in Gas, Q Q The total number of customers switching in gas was 34,155 in Q3 2018, representing a 4.92% switching rate. This represented a decrease in switching of 0.55% from the previous quarter, Q2 2018, during which time there were 34,343 customer switches, and an increase in switching of 8.38% from the same quarter of the previous year (Q3 2017) where there were 31,514 switches. Month Total Number of Switches Apr-17 10,261 May-17 10,629 Jun-17 9,986 Jul-17 9,522 Aug-17 10,639 Sep-17 11,353 Oct-17 9,743 Nov-17 12,587 Dec-17 9,172 Jan-18 11,519 Feb-18 12,288 Mar-18 11,525 Apr-18 11,519 May-18 12,139 Jun-18 10,685 Jul-18 11,201 Aug-18 12,036 Sep-18 10,918 Table 5.2: Total Switches in Gas, Q Q

37 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Number of dual fuel customer switches MARKET DEVELOPMENTS The CRU has also begun to collect data on the number of dual fuel switches per month. A dual fuel customer is defined as a site that has both gas and electricity accounts with the same supplier (whether on a specific dual fuel tariff or not). The 'dual fuel switching' indicator refers to the number of dual fuel customers (measured by MPRN/GPRN) that switched, either one account or both gas and electricity, per month. The data is provided by suppliers to the CRU Domestic Electricity Domestic Dual Fuel Domestic Gas Figure 5.3: Domestic Electricity, Gas, and Dual Fuel Switches, Q Q Dual Fuel Switches Jul-17 Aug- 17 Sep- 17 Oct-17 Nov- 17 Dec- 17 Jan- 18 Feb- 18 Mar- 18 Apr- 18 May- 18 Jun- 18 Jul-18 Aug- 18 Sep- 18 Domestic Electricity 2,614 1,791 2,571 2,592 1,916 1,360 1,679 3,372 2,264 2,830 2,931 2,500 2,919 3,318 2,919 Domestic Gas 1,502 1,791 2,571 1,161 2,149 1,257 1,907 1,913 2,193 1,937 2,256 2,098 2,059 2,566 2,176 Domestic Dual Fuel 4,469 5,960 4,235 4,462 7,247 4,357 6,728 7,146 5,432 5,503 6,993 5,497 6,552 7,355 6,646 Total Domestic Switches 8,585 9,542 9,377 8,215 11,312 6,974 10,314 12,431 9,889 10,270 12,180 10,095 11,530 13,239 11,741 Electricity Switches 25,638 27,124 27,498 25,536 31,488 25,411 25,507 28,898 25,461 26,964 28,772 25,879 24,963 27,584 25,466 Gas Switches 9,522 10,639 11,353 9,743 12,587 9,172 11,519 12,288 11,525 11,519 12,139 10,685 11,201 12,036 10,918 Total Switches 35,160 37,763 38,851 35,279 44,075 34,583 37,026 41,186 36,986 38,483 40,911 36,564 36,164 39,620 36,384 % dual fuel 24% 25% 24% 23% 26% 20% 28% 30% 27% 27% 30% 28% 32% 33% 32% Table 5.3: Dual Fuel Switches, Q Q

38 MARKET DEVELOPMENTS The total number of dual fuel switches in Q was 36,510, corresponding to approximately 33% of all switches in the quarter. This represents an increase in switching of 12% in dual fuel switches from Q2 2018, during which time there were 32,545 dual fuel switches. 5.2 Renegotiations This section presents new market monitoring data on renegotiations in the electricity and gas retail markets from July 2018 to September Internal switching or renegotiations refer to situations where a new contract term, tariff or terms & conditions have been negotiated between a customer and their current supplier. These can be initiated either by the supplier or the customer. Data on renegotiations complements that collected on switching and helps to provide a more complete picture of customer engagement and the options open to customers. This analysis looks at the number of successfully completed renegotiated contracts 5 (regardless of whether initiated by the customer or the supplier or of the number of times an individual customer renegotiated) Total Number of Successful Renegotiations Domestic Electricity Non Domestic Electricity Figure 5.4: Successful Domestic and Non-Domestic Electricity Renegotiations The total number of internal switches in domestic electricity in Q was 46,138 compared to 45,377 in Q2 2018, representing an increase of 0.016%. The total number of internal switches in non-domestic electricity in Q was 7,898 compared to 9,027 in Q2 2018, representing a decrease of 0.13%. 5 New data captured under the market monitoring framework may be subject to change 6 Data which was previously pending from suppliers on renegotiations has been submitted which will impact on figures compared to previous reports. 37

39 MARKET DEVELOPMENTS Total Number of Successful Renegotiations Domestic Gas Non-Domestic Gas Figure 5.5: Successful Domestic and Non-Domestic Gas Renegotiations The total number of internal switches in domestic gas in Q was 16,265, compared to 15,667 in Q2 2018, representing an increase of 4%. The total number of internal switches in non-domestic gas in Q was 1,340 compared to 1,869 in Q2 2018, representing a decrease of 28%. In Q3 2018, approximately 2.23% of domestic electricity customers and 2.44% of domestic gas customers renegotiated their contracts with their current supplier. In the non-domestic markets approximately 2.82% of electricity customers and 4.99% of gas customers renegotiated their contracts with their current supplier. In total, 2.30% of domestic and non-domestic electricity customers and 2.53% of domestic and non-domestic gas customers renegotiated their contracts with their current supplier. When added to the numbers of customers who switched supplier in Q3 2018, it can be concluded that 5.62% of electricity and 7.45% of gas customers looked for a better energy plan through either switching supplier or renegotiating with their current supplier. In comparison to Q2 2018, the number of domestic and non-domestic customers that looked for a better deal in Q decreased by 2.92% for electricity and by 0.23% for gas. When compared to the same quarter of the previous year (Q3 2017), the number of customers that looked for a better deal in Q increased by 2.84% for electricity and by 10.08% for gas. 38

40 MARKET DEVELOPMENTS 5.3 Summary Customer Switching and Renegotiations The total number of customers switching in electricity was 78,013 in Q This represented a decrease in switching of 4.41% from Q2 2018, where there were 81,615 switches. The total number of customers switching in gas was 34,155 in Q This represented a decrease in switching of 0.55% from Q2 2018, during which time there were 34,343 customer switches. Between July and September 2018, dual fuel switches represented 33% of total switches. The total number of internal switches in domestic electricity in Q was 46,138 compared to 45,377 in Q The total number of internal switches in domestic gas in Q was 16,265, compared to 15,667 in Q % of electricity and 7.45% of gas customers looked for a better energy plan in Q through either switching supplier or renegotiating with their current supplier. This represents a decrease of 2.92% for electricity and 0.23% for gas compared to Q and an increase of 2.84% for electricity and 10.08% for gas compared to Q

41 ENERGY CUSTOMER PROTECTION ENERGY CUSTOMER PROTECTION 40

42 ENERGY CUSTOMER PROTECTION 6. Financial Hardship PAYG This section looks at the trend in the installation of Pay As You go (PAYG) meters. Prepayment meters are split into two types; financial hardship PAYG meters and lifestyle choice PAYG meters. PAYG financial hardship meters are offered in the domestic electricity and gas markets to customers experiencing financial difficulty paying their bills. The cost of the meter and its installation are socialised and the customer does not have to pay anything extra for the meter itself. If a customer is in arrears, they cannot be disconnected for reasons of non-payment of account unless they have first been offered a PAYG meter by their supplier. In instances where it would not be appropriate to offer a PAYG meter, such as the customer not being able to use the meter or where there is no suitable location for the meter in the premises, the supplier must offer an alternative. The Codes of Practice require fair and robust customer processes to be in place for the installation of such meters. Currently Bord Gáis Energy, Electric Ireland, Energia, Flogas and SSE Airtricity provide PAYG meters for financial hardship in the electricity and gas domestic markets. A number of suppliers also offer lifestyle choice prepayment options in the electricity sector (Electric Ireland, Pinergy and PrePayPower). Customers may find such meters useful to manage their consumption and spending on electricity. For gas, GNI provides all the PAYG meters, both for financial hardship and lifestyle choices. If a customer wishes to avail of a lifestyle choice meter in gas they obtain such from GNI through their supplier. CRU will continue to monitor the installation of PAYG financial hardship meters in its quarterly reports. Electricity PAYG Financial Hardship Installs 7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Total Cumulative Installs Total Quarterly Installs 77,101 78,742 80,072 81,026 81,873 82,863 83,828 84,395 84,828 85,352 86,005 1,921 1,641 1, Table 5.1: Total and cumulative number of electricity PAYG installs for reasons of financial hardship 7 Numbers for the period Q Q had previously included numbers of token meters being phased out and replaced with keypad meters. These replacements would not be classed as new installs and therefore have been removed from the total numbers presented. 41

43 ENERGY CUSTOMER PROTECTION Gas PAYG Installs Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Total Cumulative Installs Total Quarterly Financial Hardship Installs 100, , , , , , , , , , , % of quarterly installs for financial hardship 70.09% 77.35% 70.98% 41.25% 32.97% 22.08% 18.02% 13.95% 15.59% 15.26% 9.99% Table 5.2 Total and cumulative number of gas PAYG installs The total number of PAYG financial hardship installs by ESBN declined significantly over time. The number of PAYG installs for gas also decreased over time, the majority being related to lifestyle choice customers. 7,000 Total Number of PAYG Installs Q Q ,000 5,000 4,000 3,000 2,000 1,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Electricity PAYG Installs Gas PAYG Installs Figure 5.1: Total number of PAYG installs between Q and Q Table 5.3 details the electricity PAYG meter installation rate per supplier. This was calculated by dividing the number of meter installs per quarter by the number of customers of each supplier per quarter. 42

44 ENERGY CUSTOMER PROTECTION Electricity PAYG Financial Hardship Install Rate Electric Ireland SSE Airtricity Bord Gáis Energy Energia Q % 0.20% 0.16% 0.02% Q % 0.19% 0.24% 0.03% Q % 0.13% 0.17% 0.02% Q % 0.11% 0.12% 0.01% Q % 0.03% 0.02% 0.00% Q % 0.02% 0.03% 0.00% Q % 0.07% 0.09% 0.02% Q % 0.05% 0.07% 0.02% Q % 0.06% 0.07% 0.02% Q % 0.05% 0.07% 0.01% Q % 0.03% 0.06% 0.02% Q % 0.02% 0.04% 0.01% Q % 0.03% 0.02% 0.01% Q % 0.03% 0.04% 0.001% Q % 0.04% 0.04% 0.011% Table 5.3: Electricity PAYG installation rate Table 5.4 details the Gas PAYG financial hardship meter installation rate per supplier. Gas PAYG Financial Hardship Install Rate Electric Ireland SSE Airtricity Bord Gáis Energy Flogas Q % 0.16% 0.12% 0.05% Q % 0.29% 0.32% 0.17% Q % 0.24% 0.21% 0.15% Q % 0.13% 0.10% 0.09% Q % 0.16% 0.09% 0.04% Q % 0.27% 0.12% 0.03% Q % 0.13% 0.11% 0.13% Q % 0.07% 0.06% 0.07% Q % 0.08% 0.08% 0.01% Q % 0.06% 0.09% 0.04% Q % 0.03% 0.07% 0.03% Q % 0.02% 0.03% 0.02% Q % 0.04% 0.04% 0.01% Q % 0.05% 0.05% 0.05% Q % 0.04% 0.05% 0.04% Table 5.4: Gas PAYG installation rate 43

45 ENERGY CUSTOMER PROTECTION 6.1 Summary Financial Hardship PAYG The total number of electricity PAYG financial hardship installs in Q was 653 compared to 965 in Q The total number of gas PAYG installs in Q was 1, % of these were for financial hardship reasons. In the same period in 2017, 1,937 were installed, with 18.02% for financial hardship reasons. This indicates that the installs were being driven by lifestyle choice customers. 44

46 ENERGY CUSTOMER PROTECTION 7. 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 CRU 8. The new supplier can then choose whether to proceed with or cancel the change of supplier (CoS) request where this debt flag has been raised. The debt flagging process has been in place since October 2011 and CRU monitors the use of the debt flagging facility by both losing and gaining suppliers on an on-going basis. In Q there were 575 debt flags in the domestic electricity market. The number of debt flags has increased by 14% between Q and Q and by 9.9% between Q and Q The number of CoS requests cancelled as a result of a debt flag, has increased between Q and Q3 2018, both in total numbers and percentage of debt flags raised. The total number and percentage of CoS requests cancelled as a result of a debt flag has decreased between Q and Q from 161 to 150 and from 31% to 26% respectively, with a similar trend being observed between Q and Q Electricity Debt Flags Q Q Q Q Q Q Q Q Q Q Q Total Debt Flags Total Debt Flags as % of Overall Switches Debt Flagged CoS Requests Cancelled % of Debt Flagged CoS Requests Cancelled Debt Flagged CoS not cancelled % of Debt Flagged CoS Requests not cancelled 0.71% 0.70% 0.80% 0.85% 0.74% 0.90% 0.63% 0.57% 0.61% 0.64% 0.74% % 28% 33% 36% 41% 36% 33% 35% 32% 31% 26% % 72% 67% 64% 59% 64% 67% 65% 68% 69% 74% Table 7.1: Debt Flagging in Electricity Q Q In the domestic gas market there were 614 debt flags in Q The total number of debt flags has increased by 54% between Q and Q and by 12% between Q and Q3 8 Domestic threshold: 225 for > 60 days from due. Small business & unmetered supply: 600 for > 30 days from due. Medium sized business: 1,200 for > 30 days from due. 45

47 ENERGY CUSTOMER PROTECTION The number of CoS requests cancelled, as a result of a debt flag, has increased between Q and Q3 2018, and between Q and Q3 2018, both in total numbers and percentage of debt flags raised. Of the debt flags raised the percentage that led to a refusal of a CoS request increased by 4% between Q and Q3 2018, from 46% to 48%. Gas Debt Flags Q Q Q Q Q Q Q Q Q Q Q Total Debt Flags Total Debt Flags as % of overall Switches Debt flagged CoS requests cancelled % of Debt Flagged CoS Requests Cancelled Debt Flagged CoS not cancelled % of Debt Flagged CoS Requests not cancelled 0.7% 1.4% 1.7% 1.1% 1.0% 1.4% 1.3% 1.0% 0.9% 1.6% 1.8% % 55% 51% 41% 40% 45% 37% 32% 39% 46% 48% % 45% 49% 59% 60% 55% 63% 68% 61% 54% 52% Table 7.2: Debt Flagging in Gas Q Q Summary Debt Flagging There were 575 debt flags raised in the electricity market in Q3 2018, corresponding to approximately 0.74% of all electricity CoS requests in the quarter. This represents a 9.9% increase from Q2 2018, when 523 debt flags were raised, corresponding to approximately 0.64% of all CoS requests in that quarter. 150 debt flagged CoS requests were cancelled in the electricity market in Q3 2018, which means that 26% of debt flags resulted in a CoS request being cancelled. There were 614 debt flags raised in the gas market in Q3 2018, corresponding to approximately 1.8% of all gas CoS requests in that quarter. This represents a 12% increase from Q2 2018, when 549 debt flags were raised, corresponding to approximately 1.6% of all gas CoS requests in that quarter. 294 debt flagged CoS requests were cancelled in the gas market in Q2 2018, which means that 48% of debt flags resulted in a CoS request being cancelled. 46

48 ENERGY CUSTOMER PROTECTION 8. Disconnections The disconnection/ de-energisation 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 for Q In early 2014 CRU, in conjunction with industry and the Department of Communications, Energy and Natural Resources 9, reviewed the market processes to ascertain if more could be done in further reducing disconnections (e.g. by increasing uptake of PAYG). While this work was ongoing CRU imposed a moratorium on the disconnections, which was lifted on 20 th February In May 2014, a voluntary agreement was introduced by most energy suppliers which saw them committing to never disconnect an engaging customer. The requirement placed on suppliers to offer payment plans and financial hardship meters instead of disconnecting customers in the first instance has also benefited those in financial difficulty. It is likely that improving economic conditions in recent years has also contributed to a decrease in disconnections. 8.1 Disconnections Total The total number of disconnections in Q was 1,337 for electricity and 579 for gas. Figure 8.1 shows the total number of disconnections for non-payment of account (NPA) between 2011 and Table 8.1 shows the annual number of disconnections from 2011 to 2017 and the number of disconnections in Q1 2018, Q2 2018, and Q Figure 8.1: Trend in NPA disconnections from Since renamed to the Department of Communications, Climate Action and Environment 47

49 ENERGY CUSTOMER PROTECTION Total NPA Disconnections Q Q Q Electricity 17,794 17,441 12,391 8,731 7,783 6,789 4,626 1,129 1,454 1,337 Gas 4,560 7,558 6,279 3,998 3,542 2,787 2, Table 8.1: Total (domestic and business) disconnections in electricity and gas 2011 Q Disconnections - Electricity Market CRU receives data on electricity disconnections 10 that were completed for non-payment of account reasons on a monthly basis from ESBN 11. This section analyses the data on validated electricity non-payment of account (NPA) disconnections 12. Electric Ireland Total Domestic disconnections per supplier SSE Airtricity Bord Gais Pre Pay Power Energia Pinergy Panda Total Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep Table 8.2: Total domestic disconnections by supplier, July 2017 September This data has been validated by suppliers in advance of publication. 11 NPA can cover customers in arrears that have been disconnected because they cannot pay due to financial hardship or disconnected customers who choose not to pay debt. Currently such customers cannot be distinguished in the data. This NPA data does not include data on self-disconnections. This data includes disconnections of PAYG customers due to fraud/theft. 12 PrePayPower states that, as a prepay supplier, it only disconnects in situations where they suspect a site of being vacant or in instances of fraud based on an analysis of vend and consumption data. 48

50 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 ENERGY CUSTOMER PROTECTION The majority of disconnections due to NPA in Q were for domestic customers. The market share of suppliers and rate of disconnections will be considered in the 2018 annual report, which will look at the disconnection rate per 10,000 customers. Figure 8.2 shows the trend in disconnections for 2015, 2016, 2017, Q1 2018, Q2 2018, and Q compared to the trend in installation of PAYG financial hardship meters. Without a PAYG system in place which provides an option for customers facing difficulty in paying their electricity bills, disconnections would be significantly higher. 1,800 1,600 1,400 1,200 1, Total domestic electricity disconnections compared to PAYG installs PAYG financial hardship installs Domestic Disconnections Figure 8.2: Total Domestic Electricity Disconnections compared to PAYG financial hardship installs for January 2015 to September 2018 % change in electricity disconnections between 2016 and 2018 Total Domestic Non-Domestic % change between 2016 and % -33% -31% % change between Q and Q % 13% -3% Table 8.3: % change in electricity disconnections between 2016 and

51 ENERGY CUSTOMER PROTECTION 8.3 Disconnections - Gas Market There are three types of disconnections 13 in gas: credit locks, disconnect meters (DMs) and street isolations (CTSRs). This section only focuses on the disconnections that were undertaken for nonpayment of account (NPA) reasons 14. Total domestic gas disconnections per supplier Bord Gáis Energy SSE Airtricity Flogas Electric Ireland Energia PrePay Power Total Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Table 8.4: Total domestic disconnections by supplier, July 2017 September 2018 The market share of suppliers and rate of disconnections will be considered in the annual report, which will look at the disconnection rate per 10,000 customers. Figure 8.3 shows the trend in gas disconnections compared to the trend in installation of PAYG financial hardship meters. The chart indicates that without a PAYG system, disconnections would be higher. 13 CRU receives separate data reports on all three from GNI. To determine the disconnections that were completed for nonpayment of account reasons (NPA), CRU 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. CRU then add together all the CLs and the NPA identified DMs and CTSRs to derive an estimate for total gas NPA disconnections. 14 This data has been validated by suppliers in advance of publication. 50

52 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 ENERGY CUSTOMER PROTECTION Total domestic gas disconnections compared to PAYG installs Gas PAYG (financial hardship) installs Domestic Gas Disconnections Figure 8.3: Total Domestic Gas Disconnections compared to PAYG financial hardship installs for January 2015 to September 2018 % change in gas disconnections between 2016 and 2018 Total Domestic Non-Domestic % change between 2016 and % -22% -32% % change between Q and Q % 6.7% 16.7% Table 8.5: Percentage change in gas disconnections between 2016 and Summary Disconnections The total number of disconnections in Q was 1,337 for electricity and 579 for gas. Between Q and Q3 2018, the total number of electricity disconnections have increased by 9% and the total number of gas disconnections have increased by 5.9%. 51

53 9. Arrears and Payment Plans ENERGY CUSTOMER PROTECTION The CRU has begun to collect data on the number of customers in arrears and on payment plans per quarter, including their value and length. Figures detailing the number of customers in arrears and on payment plans per market segment will be published on a quarterly basis. Arrears refers to the number of customers by market segment that were in arrears at the end of the reporting period regardless of the value of the arrears. As shown in table 9.1, between 11% and 23% of customers across all segments were in arrears in Q Total number of customers in arrears and on payment plans in Q Domestic Electricity Non-Domestic Electricity Domestic Gas Non-Domestic Gas Total Arrears 231,676 29,679 95,702 6, ,120 % of Customers in Arrears 11% 11% 14% 23% 23% Payment Plans 11,961-2,483-14,444 % of Customers on Payment Plans 0.58% % % Table 9.1: Total number of customers in arrears and on payment plans in Q Of those customers in arrears, CRU has conducted analysis on the number of domestic electricity customers in arrears for greater than 90 days in Q In domestic electricity 40% of customers in arrears have been so for greater than 90 days. In domestic gas 47% of those customers in arrears have been so for greater than 90 days. This represented 92,020 and 45,153 customers in electricity and gas respectively. Customers in arrears for over 90 days 4% Electricity 7% Gas The option for customers to enter payment plans with their supplier provides an additional measure of protection to customers who are continuously having difficulty paying their bills. A payment plan arrangement is a specific payment arrangement with a supplier to cover outstanding arrears on a customer s bills. A payment plan can include those arranged to recoup a debt, regardless of the debt source (i.e. financial hardship, fraud, credit, estimated reads, etc.). 52

54 ENERGY CUSTOMER PROTECTION As a percentage of total customers, the number of customers per market segment on payment plans is much lower than for customers in arrears (figure 9.2). 300,000 Number of customers on payment plans in relation to the number of customers in arrears 250, , , ,000 50,000 0 Electricity On a Payment Plan In Arrears Gas Figure 9.2: Number of domestic customers on payment plans in relation to the number of domestic customers in arrears Of all domestic customers in electricity 0.58% (11,961) are on payment plans. In domestic gas, 0.37% (2,483) are on payment plans. This is a relatively low percentage considering 4% (92,020) of total domestic electricity and 7% (45,153) of total domestic gas customers are in arrears for over 90 days. Of those in arrears only 5% (domestic electricity) and 3% (domestic gas) are on payment plans. There is scope for more customers that are in arrears to be on a payment plan. The CRU will keep this under review. The CRU has compiled information on the percentage of completed and broken payment plans for Q3 2018, taken at an aggregate level across suppliers. On average more payment plans are completed by electricity and gas customers than broken (Electricity: 51% completed; 49% broken. Gas: 85% completed; 15% broken). 53

55 ENERGY CUSTOMER PROTECTION 9.1 Summary Arrears and Payment Plans Between 11% and 23% of customers across all segments were in arrears in Q % of total domestic electricity customers are in arrears for longer than 90 days. This represents 40% of those electricity customers in arrears. 7% of total domestic gas customers are in arrears for longer than 90 days. This represents 47% of those gas customers in arrears. The percentage of total customers per market segment on payment plans is 0.58% for domestic electricity and 0.37% for domestic gas indicating that 11,961 electricity customers and 2,483 gas customers are on payment plans. Generally, more payment plans are completed by electricity and gas customers than broken. 54

56 BUSINESS MARKET DEVELOPMENTS BUSINESS MARKET DEVELOPMENTS 55

57 BUSINESS MARKET DEVELOPMENTS Introduction This section provides an overview of energy cost components for business customers and discusses electricity and gas prices and the types of offers available to business customers. A number of new business market monitoring metrics are presented here which will be updated on a quarterly basis in the CRU s market monitoring reports. Metrics on non-domestic market share and disconnections are also presented here. The section is structured as follows: Breakdown of electricity and gas cost components Overview of electricity and gas pass through costs and charges for 2017/18 Overview of business electricity and gas plans and prices Review of green source products for business customers Market development Non-domestic disconnections 10 Business Electricity and Gas Cost Components Whilst final energy prices are primarily influenced by wholesale energy costs, a proportion of the final price relates to regulated charges for use of the electricity and gas networks. These charges are generally passed on to customers, but suppliers may choose to absorb changes to these costs. Unregulated costs such as the wholesale cost of energy and supply costs faced by suppliers are discussed in detail in a separate energy supply costs information paper (CRU17921). Final energy prices are comprised of a number of different costs: wholesale (generation), network and supply costs. Of these the network cost element is regulated, meaning that the charges are set by the CRU and suppliers must pay these charges on behalf of their customers. In addition, 56

58 BUSINESS MARKET DEVELOPMENTS there are separate Public Service Obligation (PSO) levies and taxes. This includes the carbon tax for gas. Generation One of the primary components of final retail prices is the cost of wholesale energy. The variation in wholesale market prices is outside the control of suppliers and the CRU. As the Irish energy mix is highly dependent on natural gas, this is a major factor in determining final retail prices as the price of electricity will often reflect movements in the natural gas price. Details on the wholesale electricity market in Ireland (the Single Electricity Market) can be found through the following link: Factsheet on the SEM. Historic costs in the wholesale market are available on the SEMO website (see their Market Data section 15 ) and reports relating to some of the hedging options available to suppliers against movements in energy costs are available on the All-Island Project website (see reports on - contracts for difference (CfDs), directed contracts and PSO CfDs). In addition to SEM wholesale cost, suppliers pay SEMO (the SEM market operator) a Market Operator charge to recover the costs of administering the SEM to all electricity users. On the 1 st October 2018, the new I-SEM market went live. The implementation of this market requires changes to, and the replacement of, the systems used to currently operate and settle the existing (SEM) wholesale market. This also entails changes to wholesale charges. Up until the end of 2015 Ireland imported circa. 95% of all gas requirements from Britain via subsea interconnectors with the remainder coming from the Kinsale gas fields off the coast of Cork. Therefore, the wholesale price of gas in Ireland was set by reference to the wholesale price at the trading hub in Britain (National Balancing Point or NBP) plus the cost of transport to Ireland via the interconnectors. In December 2015, commercial gas from the Corrib gas fields in Mayo began production and now provides up to 60% of peak day gas demand in Ireland. Although Ireland is now primarily supplied by indigenous gas sources, the wholesale price has continued to be set by reference to the wholesale price at the NBP. Public Service Obligation (PSO) The PSO levy is a Government initiative designed to support electricity generation plant to meet national policy objectives of security of energy supply, the use of indigenous fuels (i.e. peat) and of the use renewable energy sources in electricity generation. 15 You will need to sign up to access the historic pricing information (note the price is referred to as the system marginal price or SMP for short). Signing up is a simple process but should you have any questions you should contact SEMO s helpline for details see 57

59 BUSINESS MARKET DEVELOPMENTS Carbon Tax The Carbon tax was introduced in 2010 and applies to mineral oils, natural gas and solid fuels supplied for combustion in Ireland. All gas suppliers must apply this tax to customer s bills. This energy tax was introduced as a means to incentivise manufacturers and suppliers to provide low carbon services and products to the household consumer market. Networks The cost associated with the services of Networks, which involves sending electricity from generation plants through the Transmission and Distribution system to customers premises, also accounts for a very significant portion of the final price of electricity for customers. The same cost applies for gas for the transport of gas through the Transmission and Distribution system. The CRU undertakes revenue reviews known as Price Controls or Price Reviews for EirGrid and ESB Networks in electricity, and for Gas Networks Ireland in gas. These revenue reviews consider the costs of developing, maintaining and operating the electricity and gas systems. On the basis of these five yearly revenue controls, the CRU approves the level of charges that the network operators may levy for each tariff year, which usually runs from October to October. Each supplier is charged on a per customer basis for access to the electricity or gas networks. Each supplier has discretion in terms of how they pass these costs through to their final customers. Supply Supply costs refer to a supplier s operating expenditure in supporting their business (e.g. administrative costs). Supply costs are not detailed here but are the subject of a separate energy supply costs information paper (CRU17921). While this paper focuses on domestic supply costs, further information on the breakdown of supplier costs is provided. Section 4 of this paper gives an overview of cost components for business electricity and gas. Taxes Suppliers are responsible for payment of an electricity tax and for returns/accounts in relation to it. Of these costs, suppliers must charge their customers the PSO levy and all applicable taxes. They may, however, choose to either absorb or charge the remaining costs to their customers. A request for information was issued to suppliers in August 2017 requesting a breakdown of their domestic and non-domestic supply costs. Based on this, the CRU has calculated the percentage components of business electricity and gas costs to give an indication to business customers of the components of their final bill. As there are large variations in consumption between different types of businesses this will lead to different final bill breakdowns, however the graphs below provide an overview of the components of costs for non-domestic customers faced by suppliers. 58

60 BUSINESS MARKET DEVELOPMENTS 10.1 Electricity A breakdown of business electricity costs is presented below. As the PSO levy is applied separately to small commercial customers (MIC < 30 kva) and medium/large commercial customers (MIC 30 kva), two separate charts to account for this have been developed. Figure 10.1: Business Electricity Total Costs (with PSO levy for small commercial customers) Figure 10.2: Business Electricity Total Costs (with PSO levy for medium/large commercial customers) The majority of costs for business electricity customers are comprised of fuel costs and network costs. 59

61 BUSINESS MARKET DEVELOPMENTS 10.2 Gas A breakdown of business gas costs is presented below, based on a weighted average cost component per customer for each gas supplier. The carbon tax has been calculated based on consumption for an SME1 customer as defined by GNI, with 27,223kWh of annual gas consumption. Figure 10.3: Business Gas Costs 60

62 BUSINESS MARKET DEVELOPMENTS 11. Business Electricity and Gas Plans and Prices This section provides information on small business electricity and Industrial and Commercial (IC) gas plans and prices, based on information collected on a quarterly basis from suppliers by the CRU. Information is received on the range of tariff plans that small electricity business (DG5 customers) and IC gas customers (with a supply point capacity below 3,750kWh and annual quantities of below or greater than 73,000kWh of gas annually) are on for each supplier. The number and range of plans offered by suppliers in these business segments varies widely, and unlike domestic plans, there is no requirement in the CRU s supplier handbook for suppliers to publish details of these plans. A revised Supplier Handbook was published in April 2017, which requires suppliers to publish a high level statement on their website regarding the methodology used to determine energy tariffs for non-household customers. This statement should document the considerations when setting energy tariffs for different categories of non-household customers. Suppliers offer a range of plans for small electricity business and IC gas customers, which can include fixed energy prices for multi-year contracts, fixed term discount products off standard or unit rates, business pay as you go contracts, variable rates and the option to fix all or a portion of electricity prices for a certain usage period. A variety of contract terms and payment options are available, while some suppliers require deposits and have penalty clauses associated with fixed term contracts. It should be noted that this section only covers the top ten commercial plans provided by suppliers. The business market segment generally has a higher proportion of customers supplied under bespoke plans than the domestic market segment. Generally, these bespoke plans are not included in the top ten plans provided by suppliers to the CRU. Therefore the average annual customer bill under the top ten commercial plan bracket may be higher than that for those customers who have signed up to a bespoke plan with a lower overall unit rate. The following information in this section should be viewed under this caveat Small Business Electricity Prices Currently, seven suppliers offer non-domestic electricity, namely Electric Ireland, Bord Gáis Energy, Energia, SSE Airtricity, Flogas, Naturgy 16 and GoPower. The CRU receives information on the standard business plans for suppliers with above 5% market share and where applicable their top 10 small business electricity plans, which includes information on the average annual bill 16 Vayu rebranded to Naturgy in August

63 BUSINESS MARKET DEVELOPMENTS for business customers on different plans, unit and standing charges, details of each plan and the total consumption and number of customers for each plan Weighted average annual bills for different non-domestic electricity consumption levels <10,000kWh 10,000-15,000kWh 15,000-20,000kWh 20,000-30,000KWh Figure 11.1: Weighted average annual bills for different non-domestic electricity consumption levels These plans contain a range of standing charges and unit charges, based on the tariff and meter type and any discounts applied. The range of these charges as reported for Q is shown below. Unit Charge Lowest unit charge Highest unit charge Average unit charge 0.057c/kWh 0.223c/kWh 0.16c/kWh There is a large range in these charges which is dependent on the consumption type and level across different business customers. Standing Charge Lowest standing charge Highest standing charge Average standing charge 0.41 per day 5.99 per day 1.05 per day Average annual bills for different non-domestic electricity consumption levels are shown below, based on a weighted average across multiple supplier s plans. 62

64 BUSINESS MARKET DEVELOPMENTS 11.2 IC Gas Prices Currently, seven suppliers offer non-domestic gas, namely Electric Ireland, Bord Gáis Energy, Energia, SSE Airtricity, Naturgy, Flogas and PrePayPower. The CRU receives information on the standard business plans for suppliers with above 5% market share and where applicable their top 10 IC gas plans, which includes information on the average annual bill for business customers on different plans, unit and standing charges, details of each plan and the total consumption and number of customers for each plan. Average annual bills for different IC gas consumption levels are shown below, based on a weighted average across multiple supplier s plans Average annual bills for different IC gas business consumption bands ,000-20,000kWh 20,000-30,000kWh 30,000-40,000kWh >40,000kWh Figure 11.2: Weighted average annual bills for IC gas business consumption bands These plans contain a range of standing charges and unit charges, based on the tariff and any discounts applied. The range of these charges as reported for Q is shown below. Unit Charge Lowest unit charge Highest unit charge Average unit charge 0.015c/kWh 0.063c/kWh 0.045c/kWh Standing Charge Lowest standing charge Highest standing charge Average standing charge per day per day per day 63

65 BUSINESS MARKET DEVELOPMENTS 11.3 Eurostat Non-Domestic Electricity and Gas Prices Eurostat publishes data on a bi-annual basis on average end user prices for different domestic and industrial/commercial electricity and gas markets. Information is published on the prices for each consumption band in electricity and gas and on average prices across all consumption bands compared to the EU and Euro Area average. Figure 4.7: Average Electricity Prices (ex-vat) to Business All Consumption Bands The price of electricity to business consumers in Ireland has been above both the EU and Euro Area since the second half of In the first half of 2018 it was 16% and 13% above the EU and Euro Area respectively. The graph below shows business electricity prices for different consumption bands over time. 64

66 /kwh BUSINESS MARKET DEVELOPMENTS Non-domestic electricity prices over time Band IA : Consumption < 20 MWh Band IC : 500 MWh < Consumption < MWh Band IE : MWh < Consumption < MWh Band IB : 20 MWh < Consumption < 500 MWh Band ID : MWh < Consumption < MWh Figure 4.8: Non-domestic electricity prices over time, S S The price of gas to business consumers in Ireland was below both the EU and Euro Area between Semester 2 of 2009 and Semester 2 of Since 2013 this has fluctuated between the EU and Euro area average. Figure 4.9: Average Gas Prices (ex-vat) to Business All Consumption Bands In the first half of 2018 the weighted average price of gas to business customers in Ireland was 4% above the EU and 0.4% below the Euro Area average. The graph below shows business gas prices for different consumption bands over time. 65

67 /kwh BUSINESS MARKET DEVELOPMENTS Non-domestic gas price over time Band I1 : Consumption < GJ Band I3 : GJ < Consumption < GJ Band I2 : GJ < Consumption < GJ Band I4 : GJ < Consumption < GJ Figure 4.10: Non-domestic gas price over time, S S Summary In semester 1 of 2018, business electricity prices increased in bands IA, IB, IC, IE, and IF and decreased in band ID compared to semester 1 of Average price increased in the dominant consumption band (IB) by 4.13%, being 8.61% higher than the Euro Area average. Business gas prices decreased in consumption bands I1 and I2 and decreased in bands I3 and I4 from semester 1 of 2017 to semester 1 of Average price decreased in the dominant consumption band (I4) by 9.36%, being 4.3% higher than the Euro Area average. 66

68 BUSINESS MARKET DEVELOPMENTS 12. Business Electricity Market Share 12.1 Small Business Electricity Market Share by Customer Numbers and MWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for small business electricity customers. The percentage change in market share from the last quarter and over the last year is also presented. Small Business Market Share Electric Ireland SSE Airtricity Bord Gáis Energy Energia Others (a) Customer Nos (b) MWhs Figure 12.1: Q Small Business Market Share (%) Q Small Business Market Share Sites MWhs Electric Ireland 70, ,837 SSE Airtricity 27, ,173 Bord Gáis Energy 26, ,716 Energia 37, ,107 Others 22, ,605 Total 184, ,438 Table 12.1: Number of sites and MWhs per supplier 67

69 BUSINESS MARKET DEVELOPMENTS Small Business - change in market share Q Q Q Q Sites MWhs Sites MWhs Electric Ireland -0.29% 0.16% -1.87% 0.47% SSE Airtricity -0.41% -1.25% -2.48% -3.38% Bord Gáis Energy 0.51% 0.55% 0.55% -0.42% Energia -0.52% -0.29% -0.64% -0.53% Others 0.72% 0.83% 4.43% 3.86% Table 12.2: % change in market share for Q Q At the end of Q3 2018, Electric Ireland had 34.54% of the small business electricity market in terms of consumption, followed by Energia with 27.73%, SSE Airtricity with 13.22% and Bord Gáis Energy with 13.32%. SSE Airtricity lost 3.38% of its market share in terms of consumption between Q Q3 2018, while Electric Ireland increased its market share by 0.47%. 68

70 BUSINESS MARKET DEVELOPMENTS 12.2 Medium Business Electricity Market Share by Customer Numbers and MWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for medium business electricity customers. The percentage change in market share from the last quarter and over the last year is also presented. The medium business electricity segment is comprised of DG3 and DG4 (public lighting and unmetered connections), DG4 and DG6 (Low voltage maximum demand). Prior to the beginning of 2017, customer numbers for this segment for DG3 and DG4 were based on the number of grouped MPRNs and single point unmetered connections. Grouped MPRNS can include any number of physical connections or technical MPRNs. From 2017, the reports for DG3 and DG4 include the number of physical connections to the distribution system rather than at a grouped level, so the total number of customer numbers will appear larger and reported market share of customer numbers in this segment has changed. However, reporting of market share on a consumption basis has not changed. Medium Business Market Share Electric Ireland SSE Airtricity Bord Gáis Energy Energia Vayu Panda Power Others (a) Customer Nos (b) MWhs Figure 12.2: Q Medium Business Electricity Market Share (%) 69

71 BUSINESS MARKET DEVELOPMENTS Q Medium Business Market Share Sites MWhs Electric Ireland 17, ,365 SSE Airtricity 4,127 94,105 Bord Gáis Energy ,287 Energia 68, ,977 Naturgy ,674 Others 1,953 85,206 Total 92, ,614 Table 12.3: Number of sites and MWhs per supplier Medium Business - change in market share Electric Ireland Q Q Q Q Sites MWhs Sites MWhs -0.05% 0.77% -0.26% 1.80% SSE Airtricity 2.61% -0.05% 2.45% -0.56% Bord Gáis Energy 0.04% -0.02% -0.12% -1.43% Energia -2.66% -0.80% -2.46% -0.98% Naturgy 0.01% 0.06% -0.01% -0.14% Others 0.03% 0.03% 0.40% 1.31% Table 12.4: % change in market share for Q Q End of Q3 2018, Electric Ireland held 41.75% of the medium business market in terms of consumption, followed by Energia with 31.29%, SSE Airtricity with 9.53%, Bord Gáis Energy with 6.41% and Naturgy with 2.40%. Between Q Q Electric Ireland increased its market share by 1.80%, while Bord Gáis Energy s market share decreased by 1.43%. 70

72 BUSINESS MARKET DEVELOPMENTS 12.3 Large Energy Users Electricity Market Share by Customer Numbers and MWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for large energy users. The percentage change in market share from the last quarter and over the last year is also presented. LEU Market Share Electric Ireland SSE Airtricity Bord Gáis Energy Energia Vayu Others (a) Customer Nos (b) MWhs Figure 12.3: Q LEU Electricity Market Share (%) Q Sites LEU Market Share MWhs Electric Ireland ,802 SSE Airtricity ,829 Bord Gáis Energy ,232 Energia ,925 Naturgy ,342 Others ,504 Total 1,895 2,758,634 Table 12.5: Number of sites and MWhs per supplier 71

73 BUSINESS MARKET DEVELOPMENTS LEUs - Change in market share Q Q Q Q Sites MWhs Sites MWhs Electric Ireland -0.51% -0.88% -2.77% -4.61% SSE Airtricity 0.52% -1.59% 0.38% 0.55% Bord Gáis Energy 0.44% 0.71% 0.14% -1.00% Energia -0.09% 0.20% 0.84% 2.05% Naturgy -0.23% -0.09% 0.15% -0.10% Others -0.13% 1.65% 1.27% 3.11% Table 12.6: % change in market share for Q to Q At the end of Q3 2018, SSE Airtricity held 30.66% of the market in terms of consumption, followed by Electric Ireland with 30.04%, Energia with 15.69%, Bord Gáis Energy with 6.64% and Naturgy with 3.31%. Electric Ireland s market share dropped to a level below another market participant s share for the first time in Q and this continued for Q Between Q to Q3 2018, Electric Ireland s market share decreased by 4.61% in terms of consumption, while Energia s market share increased by 2.05%. 72

74 13. Business Gas Market Share BUSINESS MARKET DEVELOPMENTS From the Q report, the non-domestic gas market share segments presented in the CRU s quarterly market monitoring reports changed based on discussions with GNI to better align the names and classifications of the gas market segments with the GNI Code of Operations. A number of the current non-domestic gas definitions were defined when under price regulation, so are now no longer applicable after deregulation of the market. The only market segment that changed was the previous RTF market segment, which was split into the Daily Metered (DM) and Large Daily Metered (LDM) market segments. FVT-eligible gas was renamed medium-sized non-domestic gas for the purpose of reporting. These changes are set out below: Current Name of Market Segment Revised Names and definitions Total Non-domestic gas Industrial/Commercial gas (Non-Daily Metered - NDM IC customers with a SPC below 3,750kWh) Fuel-Variation Tariff eligible gas (NDM FVT customers with a SPC above 3,750 kwh) Regulated Tariff Formula eligible gas (Annual consumption of between 5.5GWhs and 264GWhs) Total non-domestic gas Industrial/Commercial gas (NDM IC customers with a SPC below 3,750kWh) Medium-sized non-domestic gas (NDM FVT customers with a SPC above 3,750 kwh) Daily Metered (DM) Customers Large Daily Metered (LDM) Customers excluding power generators. 73

75 BUSINESS MARKET DEVELOPMENTS 13.1 Industrial and Commercial Gas Market Share by Customer Numbers and GWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for IC gas customers. The percentage change in market share from the last quarter and over the last year is also presented. IC Market Share SSE Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu Others (a) Customer Nos (b) GWhs Figure 13.1: Q IC gas market share (%) Q Sites IC Market Share GWhs GWhs (Cumulative) Bord Gáis Energy 10, SSE Airtricity 1, Electric Ireland 3, Flogas 5, Energia 3, Naturgy Others Total 24, ,512 Table 13.1: Number of sites and GWhs per supplier 74

76 BUSINESS MARKET DEVELOPMENTS IC - change in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy 0.47% -2.14% -2.70% -4.42% SSE Airtricity 0.15% -0.20% 3.11% 1.54% Electric Ireland 0.47% 2.49% 2.91% 8.05% Flogas -0.81% 0.94% -0.84% -0.59% Energia -0.35% -0.94% -2.39% -3.93% Naturgy -0.03% -0.20% -0.23% -0.59% Table 13.1: % change in market share for Q to Q End of Q3 2018, Bord Gáis Energy had the largest market share in the IC gas market, with 42.19% in terms of customer numbers. This was followed by Flogas with 21.09%, Energia with 13.68%, Electric Ireland with 13.39%, SSE Airtricity with 7.88% and Naturgy with 1.63%. Between Q to Q3 2018, SSE Airtricity increased its market share by 3.11%, while Bord Gáis Energy s market share decreased by 2.70%. 75

77 BUSINESS MARKET DEVELOPMENTS 13.2 Medium Sized Non-Domestic Market Share by Customer Numbers and GWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for medium sized non-domestic customers. The percentage change in market share from the last quarter and over the last year is also presented. Medium Sized Non-Domestic Market Share SSE Airtricity Bord Gáis Energy Electric Ireland Flogas Energia Vayu (a) Customer Nos (b) GWhs Figure 13.2: Q Medium Sized Non-Domestic Market Share (%) Medium Sized Non-Domestic Market Share Q Sites GWhs GWhs (Cumulative) Bord Gáis Energy SSE Airtricity Flogas Energia Naturgy Electric Ireland Total 1, ,860 Table 13.3: Number of sites and GWhs per supplier 76

78 BUSINESS MARKET DEVELOPMENTS Medium Sized Non- Domestic Market Share - change in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy 0.56% -1.38% -8.73% -8.37% SSE Airtricity -0.10% 0.06% 9.26% 4.30% Flogas -0.69% 0.38% -2.28% -2.54% Energia -0.91% 0.25% -2.19% -1.21% Naturgy -0.23% -1.13% -0.75% -0.78% Electric Ireland 1.33% 1.83% 4.63% 8.72% Table 13.4: % change in market share for Q Q End of Q3 2018, Bord Gáis Energy had the largest market share in the medium sized non-domestic market, with 28.87% in terms of customer numbers. This was followed by Flogas with 17.27%, Energia with 14.91%, Naturgy with 13.39%, Electric Ireland with 13.12% and SSE Airtricity with 12.39%. Between Q Q3 2018, SSE Airtricity increased its market share by 9.26% in terms of customer numbers, while Bord Gáis Energy had a decrease in its market share by 8.73%. 77

79 BUSINESS MARKET DEVELOPMENTS 13.3 DM Market Share by Customer Numbers and GWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for DM gas customers. The percentage change in market share from the last quarter and over the last year is also presented. DM Market Share SSE Airtricity Bord Gáis Energy Electric Ireland Energia Gazprom Vayu Flogas (a) Customer Nos (b) GWhs Figure 13.3: Q DM gas market share (%) Q Sites DM Market Share GWhs GWhs (Cumulative) Bord Gáis Energy SSE Airtricity Electric Ireland Gazprom Energia Naturgy Flogas Total ,234 Table 13.4: Number of sites and GWhs per supplier 78

80 BUSINESS MARKET DEVELOPMENTS DM Market Share - change in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy -0.43% -0.31% -4.15% -5.85% SSE Airtricity -0.43% -1.21% 3.19% -0.76% Electric Ireland 0.43% -0.34% -1.00% 3.62% Gazprom 0.00% -0.01% -0.45% 0.01% Energia 0.43% 2.41% 3.77% 3.84% Naturgy 0.00% -0.29% -1.33% -0.86% Flogas 0.00% -0.25% -0.03% 0.01% Table 13.4: % change in market share for Q Q End of Q3 2018, Bord Gáis Energy had the largest market share in the DM market, with 24.36% in terms of customer numbers. This was followed by Energia with 23.50%, Electric Ireland with 21.37%, Naturgy with 17.09%, SSE Airtricity with 11.97%, Flogas with 1.28% and Gazprom with 0.43%. Between Q Q3 2018, Energia increased its market share by 3.77% in terms of customer numbers, while Bord Gáis Energy had a decrease in its market share by 4.15%. 79

81 BUSINESS MARKET DEVELOPMENTS 13.4 LDM Market Share by Customer Numbers and GWhs This section outlines the market share of each supplier for Q in terms of customer numbers and consumption in MWhs for LDM gas customers. The percentage change in market share from the last quarter and over the last year is also presented. LDM Market Share SSE Airtricity Bord Gáis Energy Electric Ireland Energia Vayu (a) Customer Nos (b) GWhs Figure 13.4: Q LDM gas market share Q Sites LDM eligible Market Share GWhs GWhs (Cumulative) Bord Gáis Energy ,911 SSE Airtricity Electric Ireland Energia Naturgy Total 38 1,466 4,495 Table 13.5: Number of sites and GWhs per supplier 80

82 BUSINESS MARKET DEVELOPMENTS LDM Market Share - change in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy 2.63% -0.76% 5.26% 7.99% SSE Airtricity 0.00% 0.04% 5.26% 4.41% Electric Ireland -2.63% -0.38% % % Energia 0.00% 0.58% -2.63% 0.01% Naturgy 0.00% 0.52% 2.63% 0.37% Table 13.4: % change in market share for Q Q End of Q3 2018, Bord Gáis Energy had the largest market share in the LDM market, with 52.63% in terms of customer numbers, followed by SSE Airtricity with 15.79%, Electric Ireland and Naturgy each with 13.16%, and Energia with 5.26%. Between Q Q3 2018, Bord Gáis Energy and SSE Airtricity increased their market share each by 5.26% in terms of customer numbers, while Electric Ireland had a decrease in its market share by 10.53%. 81

83 BUSINESS MARKET DEVELOPMENTS 14. Market Concentration 14.1 Electricity Market Segments The HHI (Herfindahl-Hirschman Index) is a widely used metric to measure market concentration 17. With low market concentration, the ability of any market player to exploit market power to the detriment of consumers is reduced and consumers can benefit from competition, innovation and customer services. HHI Index Q Q Q Q Q Q Q Q Q Q Q Small Business 2,803 2,739 2,680 2,584 2,542 2,494 2,450 2,454 2,418 2,378 2,360 Medium Business 2,899 2,826 2,840 2,833 2,832 2,869 2,861 2,963 2,911 2,915 2,927 Large Business 2,896 2,835 2,783 2,632 2,647 2,559 2,475 2,484 2,426 2,427 2,330 Table 14.1: HHI scores from Q Q Overall, there has been a steady decrease in the HHI in the small business and large business segments over time, while there has been an increase in HHI in the medium business segment from Q to Q Table 14.1 is illustrated in Figure 14.1 below HHI Trend Q Q Q Q Q Q Q Q Q Q Q Q Q Small Business Medium Business Large Business Figure 14.1: HHI trends over time (Q Q3 2018) 17 It is calculated as the sum of the squares of the market shares of all firms in the market, or the 50 largest firms if applicable. It ranges between 0, for an infinite number of small firms, and 10,000, for one firm with a 100% market share. The European Commission considers a HHI above 2000 to signify a highly concentrated market. The U.S. Department of Justice considers a market with a HHI of less than 1,500 to be a competitive marketplace, a HHI of 1,500 to 2,500 to be a moderately concentrated marketplace, and an HHI of 2,500 or greater to be a highly concentrated marketplace. 82

84 % of market share % of market share BUSINESS MARKET DEVELOPMENTS It is worth noting, however, that a high or low HHI is only an indication of market concentration and needs to be viewed in combination with other measures of market conduct and performance. It is for this reason that a GINI coefficient has been calculated for each market segment and will be compared with the HHI scores. The GINI coefficient is a commonly-used measure of inequality that condenses the entire distribution for a market into a single number between 0 and 1: the higher the number, the greater the degree of inequality 18 in that market. The GINI coefficient is a numerical representation of a Lorenz Curve, which maps the ratio of the number of participants in a market and the corresponding market share of each participant. The following graphs below represent the relationship between the percentages of participants in the various business markets corresponding with their respective market share. Analysing the blue line in the graphs below, for example, in the Medium Business DM market, 60% of the market participants represent approximately 20% of the market in Q In Q this figure decreases to 16%. The red line represents true equality. The GINI coefficient is a numerical representation of the Lorenz Curve by calculating the surface area between the blue line and the red line 19. GINI Small Business Lorenz Curve Q % GINI Small Business Lorenz Curve Q % 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 20% 40% 60% 80% 100% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market % of suppliers in market Lorenz Curves for Small Business Market 18 Typically, a GINI coefficient of 0.35 would represent moderate inequality in a market, whilst a GINI Coefficient of 0.60 or higher would signal strong inequality. 19 If the area to the right of the red line and the left of the blue line is called A. The area to the right of the blue line is B. Then the GINI coefficient = (A/A+B). 83

85 % of market share % of market share % of market share % of market share BUSINESS MARKET DEVELOPMENTS 100% 80% 60% 40% 20% GINI Medium Business Lorenz Curve Q % 0% 20% 40% 60% 80% 100% % of suppliers in market GINI Medium Business Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market Lorenz Curves for Medium Business Market GINI LEU Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market GINI LEU Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market Lorenz Curves for Large Business Market Table 14.2 reports the GINI coefficient scores from Q Q The GINI coefficient, like the HHI, has gradually fallen for the small business segment from 0.64 in Q to 0.56 in Q and for the large business segment from 0.52 in Q to 0.44 in Q3 2018, whilst it has remained relatively stable over time for the medium business segment. Figure 14.2 below illustrates this trend. GINI Coefficient Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Small Business Medium Business Large Business Moderate Inequality Strong Inequality Table 14.2: GINI Coefficient from Q Q

86 BUSINESS MARKET DEVELOPMENTS GINI Trend Q Q Q Q Q Q Q Q Q Q Q Q Q Small Business GINI Coefficient Large Business GINI Coefficient Strong Inequality Medium Business GINI Coefficient Moderate Inequality Figure 14.2: GINI trends over time (Q Q3 2018) In the electricity market, the HHI (measure of market concentration) has seen a steady decrease in the small business and large business segments over time, while there has been an increase in the medium business segment. The GINI coefficient has remained relatively stable over time for the medium business segment, whilst it has gradually fallen for the small business and large business segments. 85

87 BUSINESS MARKET DEVELOPMENTS HHI Index 14.2 Gas Market Segments Q Q Q Q Q Q Q Q Q Q Q I&C 2,699 2,675 2,636 2,675 2,700 2,710 2,596 2,615 2,612 2,384 2,335 FVT 2,536 2,534 2,479 2,531 2,515 2,537 2,473 2,290 2,301 1,992 1,961 DM 3,254 3,237 3,125 3,149 2,225 2,234 2,149 2,111 2,131 2,074 2,146 LDM ,484 4,404 4,047 4,290 4,274 4,739 4,640 Table 14.3: HHI scores from Q Q Overall, the HHI has decreased over the last 11 quarters, from Q to Q There has been a decrease in the HHI for the DM market segment from 3,254 in Q to 2,146 in Q3 2018, with a big drop between Q and Q This is due to the revised market segments, i.e. the split of the RTF market segment into the Daily Metered (DM) and Large Daily Metered (LDM) market segments. The HHI has also fallen for the I&C market segment from 2,699 in Q to 2,335 in Q and for the FVT market segment from 2,536 in Q to 1,961 in Q The LDM market has also experienced a decrease in the HHI from 4,484 in Q to 4,047 in Q3 2017, with the number rising to 4,739 in Q and falling again in Q to 4,640. Compared to Q2 2018, the HHI has fallen in Q in the I&C, FVT and LDM market segments and has risen in the DM market segment. This table is illustrated in Figure 14.1 below HHI Trend: Q Q Q Q Q Q Q Q Q Q Q Q Q I&C FVT Medium Business DM LDM Figure 14.3: HHI trends over time (Q Q3 2018) As previously mentioned, a high or low HHI is only an indication of market concentration and needs to be viewed in combination with other measures of market conduct and performance. It is 86

88 % of market share % of market share % of market share % of market share BUSINESS MARKET DEVELOPMENTS for this reason that a GINI coefficient has been calculated for each market segment and will be compared with the HHI scores. The following graphs represent the relationship between the percentages of participants in the various business markets corresponding with their respective market share. Analysing the blue line in the graphs below, for example, in the Medium Business DM market, 60% of the market participants represent approximately 13% of the market in Q In Q3 2018, this figure increases to approximately 20%. The red line represents true equality. The GINI coefficient is a numerical representation of the Lorenz Curve by calculating the surface area between the blue line and the red line 20. GINI 0.42 I&C Lorenz Curve Q % GINI 0.36 I&C Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market Lorenz Curves for I&C Market GINI 0.40 FVT Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market GINI 0.23 FVT Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market Lorenz Curves for FVT Market 20 If the area to the right of the red line and the left of the blue line is called A. The area to the right of the blue line is B. Then the GINI coefficient = (A/A+B). 87

89 % of market share % of market share % of market share % of market share BUSINESS MARKET DEVELOPMENTS 100% GINI 0.57 DM Lorenz Curve Q % GINI 0.47 DM Lorenz Curve Q % 80% 60% 60% 40% 40% 20% 20% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market 0% 0% 20% 40% 60% 80% 100% % of suppliers in market Lorenz Curve for DM Market GINI 0.52 LDM Lorenz Curve Q GINI 0.51 LDM Lorenz Curve Q % 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 20% 40% 60% 80% 100% 0% 0% 20% 40% 60% 80% 100% % of suppliers in market % of suppliers in market Lorenz Curve for LDM Market Table 14.4 reports the GINI coefficient scores from Q Q The GINI coefficient has fallen in all business market segments over time. Compared to Q2 2018, in Q the GINI coefficient has remained constant in the I&C market segment, whilst it has fallen in the FVT and LDM market segments and has risen in the DM market segment. Figure 14.4 below illustrates this trend. GINI Coefficient Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q I&C FVT DM LDM Moderate Inequality Strong Inequality Table 14.4: GINI Coefficient Scores Q Q

90 BUSINESS MARKET DEVELOPMENTS GINI Trend Q Q Q Q Q Q Q Q Q Q Q Q Q I&C GINI Coefficient Medium Business DM GINI Coefficient Strong Inequality FVT GINI Coefficient Moderate Inequality LDM GINI Coefficient Figure 14.4: GINI trends over time (Q Q3 2018) In the gas market, the HHI has decreased over time in the I&C, FVT and DM market segments, whilst it has increased in the LDM market segment. Between Q and Q the GINI coefficient has remained constant in the I&C market segment, whilst it has fallen in the FVT and LDM market segments and has risen in the DM market segment. However, over time it has fallen in all market segments. 89

91 15. Non-Domestic Disconnections BUSINESS MARKET DEVELOPMENTS The total number Total of non-disconnections Non-Domestic Electricity in Q Disconnections was 283 for electricity per Supplier and 41 for gas. These represent a 2% decrease in electricity non-domestic Bord disconnections and a 5% decrease in gas Electric SSE PrePay compared to the Energia number of non-domestic Gáis disconnections in Q4 Pinergy Tables 15.1 and 15.2 below Total Ireland Airtricity Power Panda Flogas Energy show total non-domestic disconnections for January 2016 to March 2018 in electricity and gas Jan respectively. Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Table 15.1: Total Non-Domestic Electricity Disconnections per Supplier, January 2016 September

92 BUSINESS MARKET DEVELOPMENTS Bord Gáis Energy Total Non-Domestic Gas Disconnections per Supplier SSE Airtricity Flogas Electric Ireland Energia NATURG Y Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Table 15.2: Total Non-Domestic Gas Disconnections per Supplier, January 2016 September 2018 Total 91

93 16. Conclusion This report has detailed electricity and gas retail prices, plans and cost components for Q3 2018, along with domestic and business market shares of suppliers, and market concentration. It has also presented data for Q concerning customer switching, PAYG installs, debt flagging, disconnections, and arrears and payment plans. A total of 7 suppliers announced price increases in the first half of 2018, based in increased wholesale costs and regulated charges. In Q3 2018, three suppliers have announced second price increases. Supplier s increases and effective dates for tariff changes are outlined in this report. In Q3 2018, Electric Ireland remained the largest electricity supplier in terms of consumption in the domestic, small business, and medium business market segments. However, for the third consecutive quarter, Electric Ireland held the second largest share in the LEU market, with SSE Airtricity being the largest supplier in this segment. In gas, Bord Gáis Energy remained the largest supplier in terms of customer numbers in all market segments (domestic, IC, medium-sized, DM and LDM). The market share of both suppliers remained below the threshold at which they were price deregulated. It is worth noting that incumbent suppliers are now at or below 50% market share in the domestic markets (Electric Ireland 48% in electricity; BGE 45.5% in gas). Switching has continued in both the electricity and gas markets with 78,013 electricity customers and 34,155 gas customers changing their supplier in Q The number of PAYG meters installed for financial hardship decreased compared to Q The amount of disconnections for non-payment of accounts increased in Q for both electricity and gas customers compared to Q The CRU continues to support and promote the early intervention by suppliers to encourage customer engagement and uptake of payment plans and PAYG meters and to continue to ensure that the disconnection of a customer is treated as a last resort. The CRU continues to work with industry to determine what further actions can be taken to limit the level of disconnections. The CRU commits to continue to monitor all electricity and gas market segments and should it feel that customers are not benefiting, the CRU will take action to improve matters. 92

94 Annex 1 Overview of Electricity pass through costs and charges for 2017/18 1 Electricity Market Segments The electricity market is comprised of four different market segments covering different DUoS groups (distribution use of system groups or DGs) 21 : domestic, small-sized business, mediumsized business and large energy users (LEUs). It is important to know your DuoS group as some charges vary depending on which one you are in. The table below provides a breakdown of the 3 different business markets and their respective DUoS groups. Business Market DUoS Group Small Business DUoS Group 5 General Purpose Medium Business Duos Group 4 Local Authority Public Lighting DUoS Group 6 LVMD & LLF Large Energy User DUoS Group 7- Medium Voltage Max Demand DUoS Group 8-38KV Max Demand DUoS Group 9 38KV Max Demand T-CONN (Transmission Connected) 2 Consumption Some of the components of prices are charged on consumption at the trading point (on the transmission network) and others on consumption at the selling point (on the distribution network). Energy networks operate at two levels transmission and distribution. Transmission networks comprise the high voltage and high pressure lines. Distribution networks comprise the low voltage and low pressure lines. All generation charges and Transmission Use of System (TUoS) charges are based on consumption at the trading point, while Distribution Use of System (DUoS) charges are based on consumption at the selling point. Retail consumption data published on a quarterly basis by the CRU refers to consumption at selling point (i.e. at the customer s site). This will determine the level of charges to apply at the customer s site. 21 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. 93

95 To determine the trading point consumption for different market segments, a distribution loss adjustment factor (DLAF) is used. Electricity must be transported from the trading point to the customer s metering point. During this transportation, losses occur and a DLAF is applied to customers metered energy consumption to account for the losses. The energy consumption measured at a customer s meter is multiplied by the DLAF to get the consumption at which generation and transmission charges are applied. The CRU publishes DLAFs each year with different DLAFs depending on the size of a customer s connection and the time of consumption. The following are the applicable DLAFs for the 2016/17 tariff year. DLAFS Time Period Composite Day Night 38kV Sales MV Sales LV Sales Overview of charges The following electricity charges are regulated and approved annually. These 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 (capacity charges are updated on 1 st January). 94

96 Cost Charge Description Capacity Payments Payment made to generators for availability separate from energy production. Generation Networks Market Operator Charges Imperfection Charges Network transmission use of system charges (TUoS) Network Distribution use of system charges (DUoS) Charges levied on generators and suppliers for the operation of the wholesale markets. Constraint costs on the network are recovered by imperfection charges. Charges levied for the building, maintenance and operation of the transmission network. Charges levied for the building, maintenance and operation of the distribution network, PSO Public Service Obligation Levy Levied for support for renewables, security of supply and indigenous fuels (peat). 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. 95