Electricity and Gas Retail Markets Report Q3 2017

Transcription

1 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities Electricity and Gas Retail Markets Report Q Information Paper Reference: CRU Date Published: 20/12/2017

2 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 Market monitoring forms an important part of CRU s activities. The information collected through market monitoring helps to inform new policy and in the assessment of existing regulations. This report is part of a suite of other reports including monthly switching 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 any specific issues that need to be addressed. This report details changes in market shares in the electricity and gas retail markets up to Q and presents information about customer switching, renegotiations, prices and levels of discounts available. 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. 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 Q Electricity and Gas Retail Markets Overview ELECTRICITY AND GAS RETAIL PRICES PRICE INCREASES *across 7 suppliers MARKET DEVELOPMENTS Domestic Customer Market Share Domestic Switching 49% 48% 0.5% 37%* *Increase in gas switching a likely result of PrePayPower entering the gas domestic market and a number of existing suppliers providing a new PAYG offering 1.49% -2.30% 0.65% -3.14% Low levels of repeat switching. 51% of electricity and gas customers who switched in the last 12 months defaulted to a standard tariff ENERGY CUSTOMER PROTECTION 668% increase gas lifestyle PAYG installations from last year. 4% Demand for gas PAYG payment plans 5% 48% payment plans broken each month 2 domestic electricity customers in arrears for over 90 days 15% of these are on a payment plan domestic gas customers in arrears for over 90 days 6% of these are on a payment plan Reduction in disconnections and PAYG financial hardship installations

4 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities Table of Contents TABLE OF CONTENTS INTRODUCTION BACKGROUND CRU s role in Retail Market Monitoring Related Documents Summary 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 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 SUMMARY CUSTOMER SWITCHING AND RENEGOTIATIONS

5 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities 6. FINANCIAL HARDSHIP PAYG SUMMARY FINANCIAL HARDSHIP PAYG 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 BUSINESS ELECTRICITY MARKET SHARE SMALL AND MEDIUM 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 AND LDM MARKET SHARE BY CUSTOMER NUMBERS AND GWHS MARKET CONCENTRATION GAS MARKET SEGMENTS ELECTRICITY MARKET SEGMENTS NON-DOMESTIC DISCONNECTIONS

6 An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities 16. NEXT STEPS 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 APPENDIX

7 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. 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 Information on CRU s role and relevant legislation can be found on CRU s website at 6

8 1.1.3 Summary Electricity and Gas Prices A total of 7 suppliers announced price increases between Q3 and Q4 of 2017, based in increased wholesale costs and regulated charges. Supplier s increases and effective dates for tariff changes are outlined in this report. The All island wholesale electricity price (SMP) from 2012 to September 2017 is presented in this report. On average in 2017, the wholesale price of electricity has been higher than the average price for 2016 but is lower than The wholesale gas price at the UK trading hub, which sets the wholesale gas price in Ireland, also increased in 2017 and was higher than the average price for Again, the wholesale gas price is still lower than in 2015, and has been mitigated by falls in Sterling versus Euro. In September 2017, the least expensive annual average bill in electricity (based on typical consumption of 4,200kWhs) for a standard plan was with BE Energy at The least expensive discounted plan was with Energia with an annual average bill of The least expensive annual average bill in gas (based on typical annual consumption of 11,000kWhs) was with Electric Ireland at The least expensive discounted plan was with Flogas with an annual average bill of In Q3 2017, Electric Ireland, Energia, Bord Gáis Energy 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 annual average bill of 1, Market Share Domestic Electricity In Q3 2017, Electric Ireland had the largest domestic electricity market share, with 49.43% of the market in terms of consumption. This was followed by Bord Gáis Energy with 18.42%, SSE Airtricity with 15.77%, Energia with 7.27% and PrePayPower with 6.11%. Between Q and Q3 2017, Electric Ireland s market share decreased by 2.30% in terms of consumption. Energia increased its market share by 1.49%. 7

9 Market Share Domestic Gas In Q3 2017, Bord Gáis Energy had the largest market share in terms of customer numbers, with 48.26% of the domestic gas market, followed by Electric Ireland with 21.43%, SSE Airtricity with 14.41%, Flogas with 5.85% and Energia with 6.42%. Between Q and Q Bord Gáis Energy lost 3.14% of market share in terms of customer numbers. Switching and Renegotiations The total number of customers switching in electricity was 80,260 in Q This represented an increase in switching of 0.5% from Q where there were 79,886 switches. The total number of customers switching in gas was 31,514 in Q This represented an increase in switching of 37% from Q3 2016, during which time there were 23,002 customer switches. Between July and September 2017, dual fuel switches represented 23% of total switches on average. The total number of internal switches in electricity in Q was 48,144, compared to 53,151 in Q The total number of internal switches in gas in Q was 14,269, compared to 15,060 in Q This represents an 8.5% overall decrease in internal switches. 8

10 Financial Hardship PAYG and Debt Flagging The total number of electricity PAYG financial hardship installs in Q was 1,163, compared to 1,330 in Q The total number of gas PAYG installs in Q was 2, % of these were for financial hardship reasons. In the same period in 2016, 1,075 were installed, with 77.35% for financial hardship reasons. This indicates that the installs were being driven by lifestyle choice customers. Domestic Electricity and Gas Disconnections The total number of disconnections in Q was 1,225 for electricity and 547 for gas. Between Q and Q3 2017, the total number of electricity disconnections have declined by 9% and the total number of gas disconnections have declined by 36%. Arrears and Payment Plans Between 11% and 18% of customers across all segments were in arrears in Q % of total domestic electricity customers are in arrears for longer than 90 days. 5% of total domestic gas customers are in arrears for longer than 90 days. Of those customer in arrears, 31% (electricity) and 46% (gas) are in arrears for excess of 90 days. The percentage of total customers per market segment on payment plans is 0.57% for electricity and 0.32% gas indicating that 13,901 electricity customers and 2,110 gas customers are on payment plans. There is an average equal split in the number of payment plans completed and the number of payment plans broken. 9

11 Market Share Non-Domestic Electricity and Gas In Q3 2017, Electric Ireland had 37.04% of the small and medium business electricity market in terms of consumption, followed by Energia with 30.72%, SSE Airtricity with 18.05% and Bord Gáis Energy with 13.85%. From the Q report, the non-domestic gas market share segments changed based on discussions with GNI to better align with the names and classifications of the gas market segments within the GNI Code of Operations 2. In Q3 2017, Bord Gáis Energy had the largest market share in the IC gas market, with 44.89% in terms of customer numbers. This was followed by Flogas with 21.93%, Energia with 16.07%, Electric Ireland with 10.48%, SSE Airtricity with 4.77% and Vayu with 1.86%. Non-Domestic Electricity and Gas Disconnections There were a total of 312 non-domestic electricity disconnections and 60 nondomestic gas disconnections in Q

12 ELECTRICITY AND GAS RETAIL PRICES ELECTRICITY AND GAS RETAIL PRICES 11

13 ELECTRICITY AND GAS RETAIL PRICES 2. Electricity and Gas Retail Prices This section outlines the range of plans offered by suppliers from July 2017 to September 2017 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 reductions by suppliers in Q This is followed by analysis of new data received by CRU from suppliers. Data on the top ten electricity, gas and dual fuel plans per supplier in terms of customer numbers is provided to 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 if the site meets defined standards for accuracy, transparency and reliability. There are two CRU accredited price comparison websites: and Between Q3 and the beginning of Q4 2017, a number of price increases were announced across different suppliers and in addition the 2017/18 PSO levy came into effect. To date, seven suppliers have announced price increases. There are a number of drivers for these price increases, including increased wholesale electricity 12

14 ELECTRICITY AND GAS RETAIL PRICES and gas prices in 2017, outlined in section 2.1, 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. Supplier Price Change Details Effective date Pinergy A price increase for electricity of 5.6% was announced on the 1 st of November st December 2017 Flogas A price increase for gas of 3.3% was announced on the 1 st of November st December 2017 Energia Bord Gáis Energy PrePayPower SSE Airtricity Electric Ireland A price increase for electricity of 3.9% was announced on the 27 th of October 2017 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 0.09 cent a day ( 2.83 a month) was announced on the 31 st of October A price increase of 5.6% for electricity was announced on the 29 th of September A price increase of 4% for electricity was announced on the 6 th of October st December st November st December st November st February

15 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 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 SMP Euro/MWh ELECTRICITY AND GAS RETAIL PRICES 2.1 Wholesale Energy Prices The wholesale electricity market in Ireland is jointly regulated by 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 September 2017, the average SMP price for 2017 was 9% higher than the average price for 2016, however it is 10% lower than the average price for For electricity the average SMP is per MWh in For 2016, the average was per MWh, whereas in 2015 it was per MWh The figure below shows the price of electricity in this centralised gross pool market in the SEM between 2014 and 2017, along with the average price across each year SMP /MWh SMP Figure 2.1 The National Balancing Point (the trading hub for gas in Britain) price in pence per therm of gas has seen a decline since 2014, but increased towards the end of 2016 and in the first part of From February 2017 gas prices started to decrease. Since then, however, there has been a gradual increase throughout Q The figure below shows the change in day ahead gas prices over time at the NBP (National Balancing Point), the virtual trading hub which sets the Irish gas wholesale price. It also shows the average price between 2014 and In general, although 14

16 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 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 Gas Euro/therm ELECTRICITY AND GAS RETAIL PRICES year on year prices are higher than 2016, they are still lower than the average in NBP Day Ahead Gas ( /therm) NBP Day Ahead Gas ( /therm) Figure 2.2 The average NBP price in euros per therm for 2017 so far is 17.73% higher than the average for 2016, however it is 16.2% lower than the average price for 2015.In euro terms the average NBP price is approximately 7% higher. The year to date average for NBP gas (Day-ahead) is 49 cent/therm in For 2016, the average NBP price was 42 cent/therm. For 2015 the average was 59 cent/therm. 2.1 Domestic Electricity Prices In order for a domestic electricity customer to accurately compare prices between suppliers, the comparison of the estimated average annual bill, using current typical consumption values of 4,200kWhs across suppliers is the best measure. In 2017 there were six 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. 15

17 ELECTRICITY AND GAS RETAIL PRICES Standard Domestic Electricity Annual Average Bills (based on typical annual consumption of 4,200 kwhs) June 2017 Sept 2017 Electric Ireland Energia 1, , Bord Gáis Energy , SSE Airtricity , Panda power 1, , BEenergy PAYG Plans PrePayPower 1, , Pinergy 1, , Electric Ireland 1, , Table 2.1 The annual average bill for Lifestyle choice PAYG customers includes an additional supplier service charge which is reflected in the price. In Q there were six 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. Most Competitive Discounted Domestic Electricity Annual Average Bills (based on typical annual consumption of 4,200 kwhs) June 2017 Sept 2017 Electric Ireland Energia Bord Gáis Energy SSE Airtricity Panda power PAYG Plans PrePayPower - - Pinergy - - Electric Ireland - - Table Domestic Gas Prices In order for a domestic gas customer to accurately compare prices between suppliers, the comparison of the average annual bill, using current typical consumption values of 11,000kWhs across suppliers is the best measure. 16

18 ELECTRICITY AND GAS RETAIL PRICES In Q there are six suppliers offering both standard and discounted plans for domestic gas, Flogas and BGE also offered PAYG plans. Standard Domestic Gas Annual Average Bills (based on typical annual consumption of 11,000 kwhs) June 2017 Sept 2017 Electric Ireland Energia Bord Gáis Energy Flogas Just Energy SSE Airtricity PAYG Plans Flogas Bord Gáis Energy Table 2.3 Most Competitive Discounted Domestic Gas Annual Average Bills (based on typical annual consumption of 11,000 kwhs) Gas June 2017 Sept 2017 Electric Ireland Energia Bord Gáis Energy Flogas Just Energy SSE Airtricity Table Domestic Dual Fuel Prices In Q Electric Ireland, Energia, Bord Gáis Energy, Just Energy, and SSE Airtricity offered dual fuel plans to customers with price discounts for domestic customers that avail of both services from the same supplier. Highest Discounted Dual Fuel Annual Average Bills March 2017 June 2017 Electric Ireland 1, , Energia 1, , Bord Gáis Energy 1, , SSE Airtricity 1, , Just Energy - 1, Table

19 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 c/kwh 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 c/kwh ELECTRICITY AND GAS RETAIL PRICES 2.4 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. Electricity standard unit rate over time Electric Ireland SSE Airtricity Bord Gais Energy Energia PrePayPower Pinergy Electricity discount unit rate over time Electric Ireland SSE Airtricity Bord Gais Energy Energia PrePayPower Pinergy Panda Figure This average excludes the standing charges associated with PAYG plans as additional service charges are also included. 18

20 ELECTRICITY AND GAS RETAIL PRICES Competition and discounts are usually associated with the unit charge for supplier s plans. Figures 2.3 and 2.4 show the changes in electricity and gas standard and discount unit rates over time per supplier and does 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 declined in recent years and the trend across suppliers is similar. In 2016, there were a number of announcements concerning price reductions, however there have been fewer price reductions in the gas market. Price increases which were announced in the last part of 2017 had not come into effect by the end of Q3. Figure 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 CRU on a quarterly basis. 19

21 % of customers ELECTRICITY AND GAS RETAIL PRICES 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 level of up-take of discounted plans in the market. Number of customers reported on top 10 plans for Q Electricity Gas 1,083, ,945 Total number of customers in the market 2,052, ,547 % of total customers 53% 72% Table 2.6 This section presents some analysis carried out with data for Q3 2017, 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. Customers on ranges of electricity bills (pre taxes and levies, 4200kWh annual consumption) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 82% 3% 8% 7% Figure 2.5 Figure 2.5 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 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 20

22 % of customers ELECTRICITY AND GAS RETAIL PRICES 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. 2.6 Number of customers on different plans - Gas Customers on ranges of gas bills (pre- taxes, based on 11,000kWh consumption) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 80% 9% 11% Figure 2.6 Figure 2.6 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. 21

23 ELECTRICITY AND GAS RETAIL PRICES 2.7 Number of Customers Defaulting to Standard Tariffs Data is also 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 Number of customers defaulting to standard tariffs, Domestic Electricity Small Business Electricity Domestic Gas IC Gas Figure 2.7 Figure 2.7 shows the number of customers per market segment that defaulted to standard tariffs in There were 2,041,316 customers in the domestic electricity market in % of customers defaulting to standard tariffs in 2016 Domestic Electricity Small Business Electricity Domestic Gas IC Gas % of total customers 6.95% 4.75% 7.00% 2.33% % of customers who switched in the last 12 months 51.04% 24.17% 50.58% 16.57% Table 2.7 In 2016, approximately 51% 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 6.95% of all electricity customers. 22

24 ELECTRICITY AND GAS RETAIL PRICES 7% of all gas customers defaulted to standard tariffs, at the end of a discount period, amounting to over 50% of gas customers who switched supplier in the last 12 months. 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 Lower numbers of business electricity and gas customers defaulted to standard tariffs, however a significant proportion of business customers negotiate bespoke contracts with suppliers. 2.8 Features of plans In 2017 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. 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 cashback Tesco points free top ups Access to loyalty schemes 120 credit on first or second bill Discounts 2%-20% Gas discounts 1%-26% Electricity discounts Duel fuel discount bundles Payment Methods PAYG Direct Debit Bank Transfer Phone Cheque An Post Unit Charges and Standing Charges Standing charges do not vary widely Most discounts are off unit charges 23

25 ELECTRICITY AND GAS RETAIL PRICES Contract terms 12/24 month contract terms with exit fees Most customers default to standard tariffs Table Summary Electricity and Gas Retail Prices A total of 7 suppliers announced price increases between Q3 and Q4 of 2017, based in increased wholesale costs and regulated charges. Supplier s increases and effective dates for tariff changes are outlined in this report. The All island wholesale electricity price (SMP) from 2012 to September 2017 is presented in this report. On average in 2017, the wholesale price of electricity has been higher than the average price for 2016 but is lower than The wholesale gas price at the UK trading hub, which sets the wholesale gas price in Ireland, also increased in 2017 and was higher than the average price for Again, the wholesale gas price is still lower than in 2015, and has been mitigated by falls in Sterling versus Euro. In September 2017, the least expensive annual average bill in electricity (based on typical consumption of 4,200kWhs) for a standard plan was with BE Energy at The least expensive discounted plan was with Energia with an annual average bill of The least expensive annual average bill in gas (based on typical annual consumption of 11,000kWhs) was with Electric Ireland at The least expensive discounted plan was with Flogas with an annual average bill of In Q3 2017, Electric Ireland, Energia, Bord Gáis Energy 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 annual average bill of 1,

26 MARKET DEVELOPMENTS 25

27 MARKET DEVELOPMENTS 3. Market Share Domestic Electricity 3.1 Domestic Electricity Market Share by Customer Numbers and MWhs Domestic Market Share 1.29% 6.09% 0.19% 1.23% 6.20% 16.19% 54.84% 13.96% 7.27% 1.21% 0.28% 1.52% 6.11% 18.42% 49.43% 15.77% 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 1,125, ,619 SSE Airtricity 286, ,307 Bord Gáis Energy 332, ,936 PrePayPower 127, ,539 Energia 125, ,732 Pinergy 26,490 22,179 Panda 25,242 27,897 Others 3,835 5,192 Total 2,052,374 1,840,401 Table 3.1, Number of sites and Mwhs per supplier 26

28 MARKET DEVELOPMENTS Domestic Customers - change in market share Q Q Q Q Sites MWhs Sites MWhs Electric Ireland -0.36% -0.38% -2.02% -2.30% SSE Airtricity -0.30% -0.32% -0.82% -1.03% Bord Gáis Energy -0.03% 0.21% 0.48% 0.90% PrePayPower 0.14% 0.31% 0.55% 0.58% Energia 0.48% 0.36% 1.35% 1.49% Pinergy -0.02% -0.16% 0.06% -0.11% Panda 0.03% 0.06% N/A N/A Others 0.07% -0.09% -0.83% -1.04% Table 3.2, % change in market share for Q Q Summary Market Share Domestic Electricity In Q3 2017, Electric Ireland had the largest domestic electricity market share, with 49.43% of the market in terms of consumption. This was followed by Bord Gáis Energy with 18.42%, SSE Airtricity with 15.77%, Energia with 7.27% and PrePayPower with 6.11%. Between Q and Q3 2017, Electric Ireland s market share decreased by 2.30% in terms of consumption. Energia increased its market share by 1.49%. 27

29 MARKET DEVELOPMENTS 4. Market Share Domestic Gas 4.1 Domestic Gas Market Share by Customer Numbers and GWhs Domestic Market Share 5.85% 6.42% 3.63% 14.41% 6.63% 6.55% 2.86% Airtricity 15.01% BG Energy Electric Ireland Flogas 21.43% 20.03% Energia 48.26% 48.94% Vayu Others PPP Customer Nos (b) GWhs Figure 4.1, Q Domestic gas market Share Domestic Market Share Q Sites GWhs (Cumulative) GWhs (Q only) Bord Gáis Energy 316,837 2, SSE Airtricity 94, Electric Ireland 140, Flogas 38, Energia 42, Others 23, Total 656,547 4, Table 4.1, Number of sites and GWhs per supplier 28

30 MARKET DEVELOPMENTS Domestic Gaschange in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy -1.10% -0.46% -3.14% -2.76% SSE Airtricity -0.04% -0.15% 0.27% 0.73% Electric Ireland -0.18% -0.77% -1.52% -1.28% Flogas -0.08% -0.02% 0.13% 0.28% Energia 0.51% 0.23% 0.65% 0.20% Table 4.2, % change in market share 4.2 Summary Market Share Domestic Gas In Q3 2017, Bord Gáis Energy had the largest market share in terms of customer numbers, with 48.26% of the domestic gas market, followed by Electric Ireland with 21.43%, SSE Airtricity with 14.41%, Energia with 6.42%, and Flogas with 5.85%. Between Q and Q Bord Gáis Energy lost -3.14% of market share in terms of customer numbers. SSE Airtricity, Flogas, and Energia increased their market share by 0.27%, 0.13%, and 0.65%, respectively. 29

31 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 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 ,000 Net Switching of Customers Per Supplier (October 2016 to October 2017) 6,000 4,000 2, ,000-4,000-6,000-8,000 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 80,260 in Q This represented an increase in switching from Q where there were 79,886 switches. Month 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 Total Number of Switches 26,773 24,173 32,301 20,061 21,626 26,926 29,129 25,944 23,137 24,386 25,638 27,124 27,498 Table 5.1 Total switches in electricity, Q Q

32 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 Net Switching MARKET DEVELOPMENTS 4,000 Net Switching of Customers per Supplier October 2016 to October ,000 2,000 1, ,000-2,000-3,000-4,000 SSE Airtricity Bord Gáis Energy Electric Ireland Energia Flogas PrePayPower Figure 5.2, Overall switching in gas, Q Q The total number of customers switching in gas was 31,514 in Q This represented an increase in switching of 37% from Q3 2016, during which time there were 23,002 customer switches. Month Sep-16 Oct-16 Nov-16 Dec-16 Jan-16 Feb-16 Mar-16 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Total Number of Switches 7,215 7,761 7,805 7,436 7,233 8,233 6,715 9,066 10,092 11,369 10,261 10,629 9,986 Table 5.2, Total Switches in Gas, Q Q 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. 31

33 Jan-16 Feb-16 Mar-16 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 Number of dual fuel customer switches MARKET DEVELOPMENTS Dual Fuel Switches 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 Domestic Electricity Domestic Gas Domestic Dual Fuel Total Dom Switches Electricity Switches Gas Switches Total Switches 1,854 1,662 1,367 1,455 1,810 1,009 2,363 2,825 1,614 2,614 1,791 2,571 1,423 1,719 1,433 1,540 1,203 1,323 1,694 1,264 1,381 1,788 1,826 1,502 1,791 2,571 4,609 4,448 4,651 3,511 4,218 5,017 3,071 3,854 5,318 4,472 4,469 5,960 4,235 8,217 7,018 9,628 7,418 7,735 7,853 6,081 6,996 8,521 5,344 7,598 9,931 7,912 26,773 24,173 32,301 20,061 21,626 26,926 29,129 25,944 23,137 24,386 25,638 27,124 27,498 7,436 7,233 8,233 6,715 9,066 10,092 11,369 10,261 10,629 9,986 9,522 10,639 11,353 34,209 31,406 40,534 26,776 30,692 37,018 40,498 36,205 33,766 34,372 35,160 37,763 38,851 % dual fuel 24% 25% 20% 22% 23% 13% 21% 29% 23% 24% 25% 24% 20% Table 5.3, Dual Fuel Switches Domestic Electricity Domestic Dual Fuel Domestic Gas 0 Figure

34 Jan-16 Feb-16 Mar-16 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 MARKET DEVELOPMENTS 5.2 Renegotiations This section presents new market monitoring data on renegotiations in the electricity and gas retail markets from April 2016 to June Internal switching or renegotiations refer to situations where a new contract term, tariff or terms & conditions have been negotiated between the supplier and the customer. 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 4 (regardless of whether initiated by the customer or the supplier or of the number of times and individual customer renegotiated) Total Number of Successful Renegotiations Domestic Electricity Non Domestic Electricity Figure 5.4 The total number of internal switches in electricity in Q was 48,144 compared to 53,151 in Q New data captured under the market monitoring framework may be subject to change 5 Data which was previously pending from suppliers on renegotiations has been submitted which will impact on figures compared to previous reports. 33

35 Jan-16 Feb-16 Mar-16 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 MARKET DEVELOPMENTS Total Number of Successful Renegotiations Domestic Gas Non- Domestic Gas Figure 5.5 The total number of internal switches in gas in Q was 14,269, compared to 15,060 in Q Summary Customer Switching and Renegotiations The total number of customers switching in electricity was 80,260 in Q This represented an increase in switching from Q where there were 79,886 switches. The total number of customers switching in gas was 31,514 in Q This represented an increase in switching of 37% from Q3 2016, during which time there were 23,002 customer switches. Between July and September 2017, dual fuel switches represented 20% of total switches. The total number of internal switches in electricity in Q was 48,144, compared to 53,151 in Q The total number of internal switches in gas in Q was 14,269, compared to 15,060 in Q

36 ENERGY CUSTOMER PROTECTION ENERGY CUSTOMER PROTECTION 35

37 6. Financial Hardship PAYG ENERGY CUSTOMER PROTECTION This section looks at the trend in the installation of PAYG meters. Prepayment meters are split into two types; financial hardship Pay As You Go (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 Q Q Q Q Q Q Q Q Q Total Cumulative Installs 73,288 75,177 77,101 78,742 80,072 81,026 81,873 82,927 84,076 Total Quarterly Installs 2,478 1,889 1,921 1,641 1, ,054 1,163 Table 5.1 Total and cumulative number of electricity PAYG installs for reasons of financial hardship 36

38 ENERGY CUSTOMER PROTECTION Gas PAYG Installs Q Q Q Q Q Q Q Q Q Total Cumulative Installs (Financial Hardship) 6 Total Quarterly Installs (PAYG Lifestyle choice and financial hardship) % of quarterly installs for financial hardship 98,124 98,835 99, , , , , , ,149 1, ,003 1,276 1,075 1,069 1,644 2,980 2, % 72.92% 70.09% 77.35% 70.98% 41.25% 32.97% 22.08% 18.02% Table 5.2 Total and cumulative number of gas PAYG installs The total number of PAYG financial hardship installs by ESBN declined between the beginning of 2016 and the beginning of 2017 but has seen an increase in Q The number of PAYG installs for gas increased, the majority being related to lifestyle choice customers. 7,000 6,000 5,000 5,075 5,975 6,120 Total Number of PAYG Installs Electricity PAYG Installs 4,000 3,000 2,000 1,000 0 Q ,064 4,152 Gas PAYG 3,287 Installs 2,920 2,341 2,478 2,096 1, , , Q Q Q Q Q Q Q Q Q Q Q Q Q Q Figure 5.1, Total number of PAYG installs between 2014 and This table has been revised to include cumulative figures for financial hardship only. Quarterly figures reflect both lifestyle choice installs and financial hardship installs, while the % of installs for financial hardship reasons per quarter is also presented. 37

39 ENERGY CUSTOMER PROTECTION 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. Electricity PAYG financial hardship Install Rate Electric Ireland SSE Airtricity Bord Gáis Energy Energia Q % 0.32% 0.31% - Q % 0.18% 0.18% 0.01% 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 % 0.09% 0.10% 0.03% Q % 0.10% 0.09% 0.03% Q % 0.11% 0.09% 0.02% Q % 0.07% 0.05% 0.02% Q % 0.06% 0.03% 0.02% Q % 0.06% 0.08% 0.02% Q % 0.22% 0.01% 0.03% 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 % 0.56% 0.32% 0.58% Q % 0.66% 0.50% 0.41% Q % 0.45% 0.42% 0.39% Q % 0.26% 0.26% 0.23% 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 % 0.11% 0.09% 0.02% Q % 0.07% 0.06% 0.07% Q % 0.08% 0.08% 0.01% Q % 0.06% 0.10% 0.03% 38

40 ENERGY CUSTOMER PROTECTION Q % 0.22% 0.01% 0.03% Table 5.4 Gas PAYG installation rate 6.1 Summary Financial Hardship PAYG The total number of electricity PAYG financial hardship installs in Q was 1,163, compared to 1,330 in Q The total number of gas PAYG installs in Q was 2, % of these were for financial hardship reasons. In the same period in 2016, 1,075 were installed, with 77.35% for financial hardship reasons. This indicates that the installs were being driven by lifestyle choice customers. 39

41 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 CRU 7. The new supplier can then choose whether to proceed with or cancel the change of supplier (CoS) request where this flag has been raised. The debt flagging process has been in place since October 2011 and CRU monitors the use of the debt flagging facility by both losing and gaining suppliers on an on-going basis. In Q there were 657 debt flags in electricity and 398 debt flags in gas. Debt Flags Q Q Q Q Electricity Q Q Q Q Total Debt Flags Total debt Flags as % of overall Switches % of debt Flagged CoS requests Cancelled Debt Flagged CoS not cancelled Q % 1.27% 0.71% 0.70% 0.80% 0.85% 0.74% 0.90% 0.64% 33.10% 21.80% 28.57% 27.97% 33.12% 36% 41% 36% 26% Table 7.1, Debt Flagging in Electricity Q Q 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. 40

42 ENERGY CUSTOMER PROTECTION Gas Debt Flags Q Q Q Q Q Q Q Q Q Total Debt Flags Total debt Flags as % of overall Switches % of debt Flagged CoS requests Cancelled Debt Flagged CoS not cancelled 1.25% 0.93% 0.71% 1% 1.67% 1% 1% 1% 1% 44.03% 37.13% 47% 55% 50.52% 41% 40% 45% 37% Table 7.2, Debt Flagging in Gas Q Q

43 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 Resources8, 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 20th February In May 2014, a voluntary agreement was introduced by most energy suppliers which saw them committing to never disconnect an engaging customer. 8.1 Disconnections Total The total number of disconnections in Q was 1,225 for electricity and 547 for gas. Table 8.1 shows the total number of disconnections between 2011 and Q Total NPA Disconnections Q Q Q Electricity 17,794 17,441 12,391 8,731 7,783 6,789 1,145 1,306 1,225 Gas 4,560 7,558 6,279 3,998 3,542 2, Table 8.1, total (domestic and business) disconnections in Electricity and Gas 2011-Q Since renamed to the Department of Communications, Climate Action and Environment 42

44 Number of disconnections ENERGY CUSTOMER PROTECTION Total (Domestic and Business) NPA disconnections 20,000 18,000 16,000 17,794 17,441 14,000 12,000 12,391 10,000 8,000 6,000 7,558 6,279 8,731 7,783 6,789 4,000 2,000 4,560 3,998 3,542 2, Figure 8.1, trend in NPA disconnections from Disconnections-Electricity Market CRU receives data on electricity disconnections 9 that were completed for nonpayment of account reasons on a monthly basis from ESBN 10. This section analyses the data on validated electricity non-payment of account (NPA) disconnections This data has been validated by suppliers in advance of publication. 10 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. 11 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. 43

45 ENERGY CUSTOMER PROTECTION Electric Ireland Total Domestic disconnections per supplier SSE Airtricity Bord Gais Energy Pre Pay Power Energia Pinergy Panda Total Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Table 8.2, Total domestic disconnections by supplier, January 2016 September 2017 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 2017 annual report, which will look at the disconnection rate per 10,000 customers. Figure 8.2 shows the trend in disconnections for 2015, 2016 and 2017 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. 44

46 ENERGY CUSTOMER PROTECTION 1,800 1,600 1,400 1,200 1, Total domestic electricity disconnections compared to PAYG installs 1, , ,358 1,187 1,082 1, PAYG financial hardship installs Domestic Disconnections Figure 8.2, Total Domestic Electricity Disconnections compared to PAYG financial hardship installs for January 2015 to September 2017 Percentage change in electricity disconnections between 2014 and 2017 Total Domestic Non-Domestic % change between 2015 and % -19% 22% % change between Q and Q % -2% -29% Table

47 ENERGY CUSTOMER PROTECTION 8.3 Disconnections- Gas Market There are three types of disconnections 12 in gas: credit locks, disconnect meters (DMs) and street isolations (CTSRs). This section only focuses on the disconnections that were undertaken for non-payment of account (NPA) reasons 13. Bord Gáis Energy Total domestic gas disconnections per supplier SSE Airtricity Flogas Electric Ireland Energia Total Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Table 8.4, Total domestic disconnections by supplier, January 2015 September 2017 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 12 CRU receives separate data reports on all three from GNI. To determine the disconnections that were completed for non-payment 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. 13 This data has been validated by suppliers in advance of publication. 46

48 ENERGY CUSTOMER PROTECTION PAYG financial hardship meters. The chart indicates that without a PAYG system, disconnections would be higher. Total 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 2017 Percentage change in gas disconnections between 2014 and 2017 Total Domestic Non-Domestic % change between 2015 and % -26% 88% % change between Q and Q % -38% -23% Table Summary Disconnections The total number of disconnections in Q was 1,225 for electricity and 547 for gas. Between Q and Q3 2017, the total number of electricity disconnections have declined by 9% and the total number of gas disconnections have declined by 36%. 47

49 9. Arrears and Payment Plans ENERGY CUSTOMER PROTECTION 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 18% 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 257,643 22,640 90,532 4, ,505 Payment Plans 11, , ,805 Table 9.1 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 31% of customers in arrears have been so for greater than 90 days. In domestic gas 46% of those customers in arrears have been so for greater than 90 days. This represented 80,410 and 34,606 customers in electricity and gas respectively. Customers in arrears for over 90 days 4% Electricity 5% 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, 48

50 ENERGY CUSTOMER PROTECTION fraud, credit, estimated reads, etc.). 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) 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Number of Customers on payment plans in relation to the number of customers in arrears Electricity Gas Figure 9.2 Of the total customer numbers in electricity 0.57% (11,695) are on payment plans. In gas, 0.32% (2,110) are on payment plans. This is a relatively low percentage considering 4% (80,410) of total electricity and 5% (32,606) of total gas customers are in arrears for over 90 days. Of those in arrears exceeding 90 days only 15% (electricity) and 6% (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. CRU has compiled information on the percentage of completed and broken payment plans for Q3 of 2017, taken at an aggregate level across suppliers. On average the percentage of completed is in parity (Electricity: 54% completed: 46% broken. Gas: 51% completed: 49% broken). This can be interpreted that for each payment plan completed another payment plan is broken. 49

51 ENERGY CUSTOMER PROTECTION 9.1 Summary Arrears and Payment Plans Between 11% and 18% of customers across all segments were in arrears in Q % of total domestic electricity customers are in arrears for longer than 90 days. 5% of total domestic gas customers are in arrears for longer than 90 days. Of those customer in arrears, 31% (electricity) and 46% (gas) are in arrears for excess of 90 days. The percentage of total customers per market segment on payment plans is 0.57% for electricity and 0.32% gas indicating that 13,901 electricity customers and 2,110 gas customers are on payment plans There is an average equal split in the number of payment plans completed and the number of payment plans broken. 50

52 BUSINESS MARKET DEVELOPMENTS BUSINESS MARKET DEVELOPMENTS 51

53 BUSINESS MARKET DEVELOPMENTS 10. 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 10.1 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). 52

54 BUSINESS MARKET DEVELOPMENTS 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, there are separate Public Service Obligation 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 14 ) 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 23 rd May 2018, the new I-SEM market will go live. The implementation of this market will require changes to, and the replacement of, the systems used to currently operate and settle the existing (SEM) wholesale market. This will also entail 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. 14 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 53

55 BUSINESS MARKET DEVELOPMENTS 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. 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 54

56 BUSINESS MARKET DEVELOPMENTS 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 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. Business Electricity Total Costs (with PSO levy for small commerical customers) 0.43% 3.80% 12.23% 40.60% 43.05% Fuel costs Network costs Supply costs PSO Tax Figure

57 BUSINESS MARKET DEVELOPMENTS Business Electricity Total Costs (with PSO levy for medium/large commerical customers) 3.03% 12.22% 3.68% 39.38% 41.79% Fuel costs Network costs Supply costs PSO Tax Figure 10.2 The majority of costs for business electricity customers are comprised of fuel costs and network costs 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. Business Gas Costs 0.80% 12.87% 3.08% 30.59% 52.66% Fuel Network Supply Carbon Tax Tax Figure

58 BUSINESS MARKET DEVELOPMENTS 11. Business electricity and gas plans and prices This section provides information on small business electricity and 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 nonhousehold 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 Small business electricity prices Currently, six suppliers offer non-domestic electricity, including Electric Ireland, Bord Gáis Energy, Energia, SSE Airtricity, Vayu and GoPower. The CRU receives information on the standard business plans for suppliers with above 1% market share and where applicable their top 10 small business electricity 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 non-domestic electricity consumption levels are shown below, based on a weighted average across multiple supplier s plans. 57

59 BUSINESS MARKET DEVELOPMENTS Weighted average annual bills for different nondomestic electricity consumption levels <10,000kWh 10,000-15,000kWh 15,000-20,000kWh 20,000-30,000KWh Figure 11.1 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 Q2 is shown below. Unit Charge Lowest unit charge Highest unit charge Average unit charge 0.057c/kWh 0.19c.kWh 0.15c/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 per day per day per day 58

60 BUSINESS MARKET DEVELOPMENTS 11.2 IC gas prices Currently, six suppliers offer non-domestic electricity, including Electric Ireland, Bord Gáis Energy, Energia, SSE Airtricity, Vayu and Flogas. The CRU receives information on the standard business plans for suppliers with above 1% 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 Weighted average annual bills for IC gas business consumption bands ,000-20,000kWh 20,000-30,000kWh 30,000-40,000kWh >40,000kWh Figure 11.2 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 Q2 is shown below. Unit Charge Lowest unit charge Highest unit charge Average unit charge 0.022c/kWh 0.06c/kWh 0.049c/kWh Standing Charge Lowest standing charge Highest standing charge Average standing charge 59

61 BUSINESS MARKET DEVELOPMENTS per day per day 0.59 per day 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 Euro Area average. Figure 11.3 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 2011, however the weighted average price fell by 3.4% in the second half of In the second half of 2016 it was 7.8%% and 1.8% above the EU and Euro Area respectively. The graph below shows business electricity prices for different consumption bands over time. 60

62 /kwh BUSINESS MARKET DEVELOPMENTS Non-domestic electricity prices over time Band IA : Consumption < 20 MWh Band IC : 500 MWh < Consumption < MWh Band IB : 20 MWh < Consumption < 500 MWh Band ID : MWh < Consumption < MWh Band IE : MWh < Consumption < MWh Figure 11.4 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 11.5 Average Gas Prices (ex-vat) to Business All Consumption Bands 61

63 /kwh BUSINESS MARKET DEVELOPMENTS In the second semester of 2016 the average price of business gas increased by 3.6% and was 9% above the EU average and 5% above the Euro Area average. The graph below shows business gas prices for different consumption bands over time Non domestic gas price over time Band I1 : Consumption < GJ Band I2 : GJ < Consumption < GJ Band I3 : GJ < Consumption < GJ Band I4 : GJ < Consumption < GJ Figure

64 BUSINESS MARKET DEVELOPMENTS 12. Business Electricity Market Share 12.1 Small and Medium Business Electricity Market Share by Customer Numbers and MWhs SME Market Share 0.70% 0.34% 22.59% 43.16% 30.72% 37.04% Electric Ireland Airtricity 14.60% 18.95% 13.85% 18.05% Bord Gáis Energy Energia Others (a) Customer Nos (b) MWhs Figure 12.1, Q SME market Share Q Small Business Market Share Sites MWhs Electric Ireland 74, ,439 SSE Airtricity 32, ,122 Bord Gáis Energy 25, ,237 Energia 38, ,411 Others 11,745 54,112 Total 172, ,705 Table 12.1, Number of sites and MWhs per supplier 63

65 BUSINESS MARKET DEVELOPMENTS Small Business - change in Q Q Q Q market share Sites MWhs Sites MWhs Electric Ireland 1.18% -1.40% -1.86% -1.56% SSE Airtricity 0.78% -0.48% -1.94% -3.61% Bord Gáis Energy 1.20% -0.04% 2.18% 0.37% Energia 2.33% 1.66% 2.23% -0.25% Others -6.12% -7.16% -1.23% -2.37% Table 12.2, % change in market share for Q to Q In Q3 2017, Electric Ireland had 37.04% of the small and medium business electricity market in terms of consumption, followed by Energia with 30.72%, SSE Airtricity with 18.05% and Bord Gáis Energy with 13.85%. SSE Airtricity lost 3.61% of its market share in terms of consumption between Q and Q3 2017, while Bord Gáis Energy increased its market share by 0.37% Medium Business Electricity Market Share by Customer Numbers and MWhs 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 will 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. 64

66 BUSINESS MARKET DEVELOPMENTS Medium Business Market Share 0.25% 1.70% 2.73% 0.00% Electric Ireland 18.72% 1.96% 1.13% 34.81% 43.11% SSE Airtricity Bord Gáis Energy Energia 76.24% 8.46% 10.89% Vayu Others (a) Customer Nos (b) MWhs Figure 12.2, Q Medium Business Electricity market Share Q Medium Business 15 Market Share Sites MWhs Electric Ireland 17, ,068 SSE Airtricity 1,789 99,268 Bord Gáis Energy 1,037 77,134 Energia 69, ,444 Vayu ,929 Others 1,552 61,522 Total 91, ,365 Table 12.3, Number of sites and MWhs per supplier 15 Medium-sized business includes low voltage maximum demand (DG6) and public lighting (DG 3&DG4). 65

67 BUSINESS MARKET DEVELOPMENTS Medium Business - change in market share Q Q MWhs Q Q MWhs Electric Ireland -2.24% 0.69% SSE Airtricity -0.13% -5.33% Bord Gáis Energy -0.10% -0.21% Energia 4.09% 1.97% Vayu -0.11% -0.14% Others -7.84% -3.30% Table 12.4, % change in market share for Q to Q In Q3 2017, Electric Ireland held 43.11% of the medium business market in terms of consumption, followed by Energia with 34.81%, SSE Airtricity with 10.89%, Bord Gáis Energy with 8.46% and Vayu with 2.73%. Between Q and Q Energia increased its market share by 1.97%, while SSE Airtricity s market share decreased by 5.33% Large Energy Users Electricity Market Share by Customer Numbers and MWhs LEU Market Share 5.04% 0.16% 7.45% 7.50% Electric Ireland 36.97% 19.38% 41.46% SSE Airtricity Bord Gáis Energy 21.36% 10.25% Energia Vayu 9.53% 17.20% 23.71% Others (a) Customer Nos (b) MWhs Figure 12.3, Q LEU Electricity market Share 66

68 BUSINESS MARKET DEVELOPMENTS Q Sites LEU Market Share MWhs Electric Ireland ,802 SSE Airtricity ,451 Bord Gáis Energy ,945 Energia ,018 Vayu ,441 Others ,011 Total 1,689 1,186,498 Table 12.5, Number of sites and Mwhs per supplier LEUs - Change change in market share Q Q Q Q Sites MWhs Sites MWhs Electric Ireland 2.12% 3.24% -3.53% -4.00% SSE Airtricity 1.21% -2.02% 1.46% -0.52% Bord Gáis Energy 1.17% 0.99% 0.78% 1.12% Energia 2.96% 2.76% 4.67% 5.76% Vayu 0.46% 0.31% 0.95% 1.64% Others 0.19% 0.01% 3.77% -7.88% Table 12.6, % change in market share for Q to Q In Q3 2017, Electric Ireland held 41.46% of the market in terms of consumption, followed by SSE Airtricity with 23.71%, Energia with 19.38%, Bord Gáis Energy with 10.25% and Vayu with 5.04%. Between Q and Q3 2017, Electric Ireland s market share decreased by 3.53% in terms of consumption, while SSE Airtricity s market share increased by 4.67% 67

69 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. 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 Total Non-domestic gas Industrial/Commercial gas (NDM IC customers with a SPC below 3,750kWh) Revised Names and definitions Total non-domestic gas Industrial/Commercial gas (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) 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. 68

70 BUSINESS MARKET DEVELOPMENTS 13.1 Industrial and Commercial Gas Market Share by Customer Numbers and GWhs NDM IC Market Share 1.86% 4.77% 4.10% 3.69% Airtricity 21.93% 16.07% 44.89% 18.87% 37.37% Bord Gáis Energy Electric Ireland Flogas 27.01% Energia 10.48% 8.86% Vayu (a) Customer Nos (b) GWhs Figure 13.1, Q IC gas market share NDM IC 16 Market Share Q Sites GWhs (cumulative) GWhs (Q2 2017) Bord Gáis Energy 10, SSE Airtricity 1, Electric Ireland 2, Flogas 5, Energia 3, Vayu Total 24, Table 13.1, Number of sites and GWhs per supplier 16 Non-daily metered industrial and commercial. 69

71 BUSINESS MARKET DEVELOPMENTS NDM IC- change in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy -2.97% -1.79% 1.50% 4.44% SSE Airtricity Electric Ireland Flogas Energia Vayu -0.06% -0.08% -0.07% -0.33% 3.16% 2.41% 3.88% 3.23% -0.17% 1.01% -0.75% -3.51% 0.04% -1.78% -4.55% -4.82% -0.02% 0.10% 0.00% 0.89% Table 13.1, % change in market share for Q to Q In Q3 2017, Bord Gáis Energy had the largest market share in the IC gas market, with 44.89% in terms of customer numbers. This was followed by Flogas with 21.93%, Energia with 16.07%, Electric Ireland with 10.48%, SSE Airtricity with 4.77% and Vayu with 1.86%. Between Q and , Bord Gáis Energy increased its market share by 4.14%, while Energia s market share decreased by 4.82% 13.2 Medium Sized Non-Domestic Market Share by Customer Numbers and GWhs Medium Sized Non-Domestic Market Share 17.09% 14.13% 3.13% 37.6% 2.7% 12.79% 16.7% 35.9% Airtricity Bord Gáis Energy Electric Ireland Flogas 19.55% 8.49% 26.46% 5.34% Energia (a) Customer Nos (b) GWhs 70

72 BUSINESS MARKET DEVELOPMENTS Figure 13.2 Q Medium Sized Non-Domestic Market Share Medium Sized Non-Domestic Market Share Q Sites GWhs (Cumulative) GWhs (Q3 2017) Bord Gáis Energy SSE Airtricity Flogas Energia Vayu Electric Ireland Total 1,778 1, Table 13.3, Number of sites and GWhs per supplier Medium Sized Non-Domestic Market Share - change in market share Q Q Q Q Sites GWhs Sites GWhs Bord Gáis Energy -5.65% -0.74% -5.25% 2.16% SSE Airtricity 0.32% -0.25% 0.38% -0.04% Flogas -0.58% 1.21% -0.74% -1.41% Energia -0.12% -1.87% -0.32% -2.48% Vayu -0.21% -1.24% -0.27% -0.66% Electric Ireland 6.24% 2.78% 6.19% 2.31% Table 13.4, % change in market share for Q Q In Q3 2017, Bord Gáis Energy had the largest market share in the medium sized nondomestic market, with 37.60% in terms of customer numbers. This was followed by Flogas with 19.55%, Energia with 17.09%, Vayu with 14.13%, SSE Airtricity with 3.13% and Electric Ireland with 8.19%. Between Q and Q3 2017, Electric Ireland increased its market share by 6.24% in terms of customer numbers, while Bord Gáis Energy had a decrease in its market share by -5.65% 71

73 BUSINESS MARKET DEVELOPMENTS 13.3 DM and LDM Market Share by Customer Numbers and GWhs DM Market Share 0.88% 1.32% 8.77% 18.42% 19.74% 28.51% 0.48% 0.48% 11.41% 19.77% 27.33% 25.72% Airtricity BG Energy Electric Ireland Energia Gazprom 22.37% 14.79% Vayu (a) Customer Nos (b) GWhs Figure 13.3, Q DM gas market share Q Sites DM Market Share GWhs (cumulative) GWhs (Q3 2017) Bord Gáis Energy SSE Airtricity Electric Ireland Gazprom Energia Vayu Flogas Total 228 2, Table 13.4, Number of sites and GWhs per supplier 72

74 BUSINESS MARKET DEVELOPMENTS LDM Market Share 7.89% 10.53% 10.53% 3.15% 8.68% 5.85% Airtricity BG Energy 23.68% 47.37% 24.74% 57.58% Electric Ireland Energia Gazprom Vayu (a) Customer Nos (b) GWhs Figure 13.4, Q LDM gas market share Q Sites LDM eligible Market Share GWhs (cumulative) GWhs (Q2 2017) Bord Gáis Energy 18 2, SSE Airtricity Electric Ireland Gazprom Energia Vayu Flogas Total 38 2,930 1,566 Table 13.5, Number of sites and GWhs per supplier In Q3 2017, Bord Gáis Energy held 28.51% of DM market share in terms of customer numbers, followed by Electric Ireland with 22.37%, Energia with 19.74%, Vayu with 18.42%. In Q Bord Gáis Energy held 47.37% of LDM market share in terms of customer numbers, followed by Electric Ireland with 23.68%, SSE Airtricity with 10.53%, Vayu with 10.53% and Energia with 7.89%. 73

75 BUSINESS MARKET DEVELOPMENTS 14. Market Concentration 14.1 Gas Market Segments The HHI 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 I&C 2,698 2,674 2,635 2,674 2,700 2,710 2,596 FVT 2,535 2,533 2,479 2,531 2,514 2,537 2,472 Medium Business DM Threshold for competitive market 3,117 3,237 3,125 3,148 1,856 2,234 2,149 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Table 14.1 HHI scores from Q Q Overall, the HHI has remained fairly consistent over the last 7 quarters, from Q to Q There has, however, been a decrease in the HHI for Medium Business DM. For Q1 2017, the HHI fell below the threshold for competitive market. This is table is illustrated in Figure 14.1 below. 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. Based on guidance from the European Commission, a HHI above 2000 signifies a highly concentrated market. 74

76 BUSINESS MARKET DEVELOPMENTS Changes to GINI Market Segment Over Time Q Q Q Q Q Q Q I&C GINI Coefficient Medium Business DM GINI Coefficient Strong Inequality FVT GINI Coefficient Moderate Inequality Figure 14.1 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 15% of the market in Q In Q this figure increases to 20%. The red line represents true equality. The GINI coefficient is a 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. 75

77 Percentage of market share Percentage of market share Percentage of market share Percentage of market share BUSINESS MARKET DEVELOPMENTS numerical representation of the Lorenz Curve by calculating the surface area between the blue line and the red line 19 GINI 0.42 I&C Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% Percentage of market particiapnts 100% 80% 60% 40% 20% GINI 0.43 I&C Lorenz Curve Q % 0% 20% 40% 60% 80% 100% Percentage of market participants Lorenz Curves for I&C Market GINI 0.40 FVT Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% Percentage of market participants GINI 0.39 FVT Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% Percentage of market participants Lorenz Curves for FVT Market 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). 76

78 Percentage of market share Percentage of market share BUSINESS MARKET DEVELOPMENTS GINI 0.57 Medium Business DV Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% Percentage of market participants GINI 0.49 Medium Business DV Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% Percentage of market participants Lorenz Curve for Medium Business DM Market Table 15.2 reports the GINI coefficient scores from Q Q The GINI coefficient, like the HHI, has remained relatively stable over time, whilst falling for the Medium Business DM segment. Figure 15.2 below illustrates this trend. Q Q Q Q Q Q Q I&C GINI Coefficient FVT GINI Coefficient Medium Business DM GINI Coefficient Moderate Inequality Strong Inequality Table 14.2 GINI Coefficient Scores Q Q

79 BUSINESS MARKET DEVELOPMENTS Changes to GINI Market Segment Over Time Q Q Q Q Q Q Q I&C GINI Coefficient Medium Business DM GINI Coefficient Strong Inequality FVT GINI Coefficient Moderate Inequality Figure 14.2 GINI trends over time 14.2 Electricity Market Segments HHI Index Q Q Q Q Q Q Q Small Business 2,803 2,739 2,680 2,586 2,545 2,497 2,596 Medium Business 2,899 2,826 2,840 2,833 2,832 2,868 2,472 Large Business 2,896 2,835 2,783 2,632 2,616 2,391 2,149 Threshold for competitive market 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Table 14.3 HHI scores from Q Q Overall, the HHI has remained fairly consistent over the last 7 quarters, from Q to Q There has, however, been a steady decrease in the HHI for both small and large business over time. This table is illustrated in Figure 14.2 below. 78

80 BUSINESS MARKET DEVELOPMENTS 4,000 Changes to HHI Market Segment Over Time 3,500 3,000 2,500 2,000 1,500 1, Q Q Q Q Q Q Q Domestic Small Business Medium Business Large Business Threshold for competitive market Figure 14.4 HHI trends over time 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 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 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 15% of the market in Q In Q this figure increases to 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 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). 79

81 % of market share % of market share % of market share % of market share % of market share % of market share BUSINESS MARKET DEVELOPMENTS 100% 80% 60% 40% 20% GINI 0.60 Small Business Lorenz Curve Q % 0% 20% 40% 60% 80% 100% % of firms in industry 100% 80% 60% 40% 20% GINI 0.55 Small Business Lorenz Curve Q % 0% 20% 40% 60% 80% 100% % of firms in industry Lorenz Curves for Small Business Market 100% 80% 60% 40% 20% GINI Medium Business Lorenz Curve Q % 0% 20% 40% 60% 80% 100% % of firms industry 100% 80% 60% 40% 20% Gini 0.52 Medium Business Lorenz Curve Q % 0% 20% 40% 60% 80% 100% % of firms in industry Lorenz Curves for Medium Business Market GINI: Large Business Lorenz Curve Q % 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of firms in industry GINI 0.49 large Business Lorenz Curve 100% Q % 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% % of firms in industry 80

82 BUSINESS MARKET DEVELOPMENTS Lorenz Curves for Medium Business Market Table 14.4 reports the GINI coefficient scores from Q Q The GINI coefficient, like the HHI, has remained relatively stable over time, whilst falling in Q for the small business segment. Figure 15.4 below illustrates this trend. Q Q Q Q Q Q Q Small Business Medium Business Large Business Moderate Inequality Strong Inequality Table Changes to GINI Market Segment Over Time Q Q Q Q Q Q Q Domestic GINI Coefficient Medium Business GINI Coefficient Moderate Inequality Small Business GINI Coefficient Large Business GINI Coefficient Strong Inequality Figure 14.5 GINI trends over time 81

83 BUSINESS MARKET DEVELOPMENTS 15. Non-Domestic Disconnections Electric Ireland Total Non-Domestic disconnections per supplier Energia SSE Airtricity Bord Gais Energy PrePay Power Pinergy Table 15.1, Total non-domestic electricity disconnections, 2015-Q Total Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

84 BUSINESS MARKET DEVELOPMENTS Bórd Gáis Energy Total non-domestic gas disconnections per supplier SSE Airtricity Flogas Electric Ireland Energia VAYU Total 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, 2015-Q

85 16. Next Steps This report has detailed the market share of suppliers for Q along with disconnections data. It has presented data for Q concerning debt flagging, PAYG installs, customer switching and electricity and gas prices and introduced a new section providing information for business customers. It is encouraging to see that the trends in both disconnections were downward for Q3 2017, however there were a range of price increases announced between September and November. Data for Q4 of 2017 will be presented in the 2017 annual market monitoring report, to be published in the first part of Image Credits Bill by Jon Rockicon; Customers by Hopkins; Market Development by Creative Stall; Energy Supply by Vladimir Belochkinc; Saving Money by Delwer Hossain; Landscape by Royyan Razka; Tearing by Luis Prado; Scale by Gabriel Sanchez; Justice by Gregor Cresnar; Magnifying glass by Miroku Sama; Euro by Gagana; Debt by Nathan Stang; Stairs Jevgeni Striganov; Wallet by Creative Stall, PK; Coins by Gilbert Bages, ES. From thenounproject.com 84

86 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 Large Energy User Duos Group 4 Local Authority Public Lighting DUoS Group 6 LVMD & LLF 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 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. 85

87 (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. 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 CER 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 1st October annually (capacity charges are updated on 1st January). 86

88 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. 87