electricity & gas retail markets annual report 2011 · 4 new licences were issued in 2011, all...

Electricity & Gas Retail Markets Annual Report 2011

DOCUMENT TYPE:

Information Paper

REFERENCE:

CER/12/072

DATE PUBLISHED:

6th June 2012

QUERIES TO: [email protected]

The Commission for Energy Regulation, The Exchange, Belgard Square North, Tallaght, Dublin 24. www.cer.ie

http://www.cer.ie/

Retail Market Annual Report 2011 – CER/12/072 6th June 2012

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Executive Summary The CER has published regular retail market reports since 2008 in order to support the development of retail competition. The reports are published quarterly and contain information on competition metrics including market shares and switching. In parallel, the CER has published information on market statistics such as the level of customer disconnections and the rollout of prepayment meters. The information provides transparency on competition and consumer activity to the market and other stakeholders. Market information has been published quarterly over the course of 2011, and this report gives the update for quarter 4 but also serves as the annual report, giving an overview of the retail markets in 2011 in the areas of competition, pricing, customer protection initiatives, and levels of customer satisfaction. The CER intends that this report will prove to be a useful reference for suppliers and industry participants monitoring trends and changes in market features. Market Overview Overall the retail markets contracted in 2011 in terms of total consumer consumption relative to 2010. A year on year comparison shows that consumption was down across all electricity retail sectors compared to 2010 MWhs. The small business market saw a decrease of 3.9%, domestic, medium sized businesses and LEUs saw decreases of 2.5%, 2.2% and 0.2% respectively. Customer numbers were relatively stable showing a small increase from 2010 to 2011 in domestic, medium business and LEU markets. The small business sector saw a decline in customer numbers. In the gas market there were significant decreases in consumption in the domestic and NDM IC sectors at 19.8% and 12.60% respectively. What was defined as the FVT sector showed a decrease of 7.9%, while the former RTF sector showed a slight increase. There were small increases in customer numbers in all bar one sector with the largest increase being 2.4% in the NDM IC sector. 4 new licences were issued in 2011, all 4 were in electricity. There were 7 active suppliers in the ROI electricity retail markets in 2011. One of these suppliers, Pre Pay Power commenced operation in 2011 exclusively in the retail domestic electricity prepayment market. There were 8 active suppliers in the gas retail business and domestic market in 2011 but there were no new market entrants. 3 suppliers were operating in the domestic market offering dual fuel products i.e. gas and electricity.


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Competition 2011 was a very significant year in the development of the retail market with the full deregulation of the electricity market in April 2011 and the deregulation of all gas business markets in October 2011. The final decision on the removal of all obligations of tariff regulation from (formerly) ESB Customer Supply was a major milestone which opened the way for further competitive pressure in the electricity and gas markets. As per the requirements of the deregulation Roadmap, the ESB supply companies completed the branding change, transitioning to Electric Ireland. The deregulation decision saw Electric Ireland promote a range of single and dual fuel offers, taking a position in the gas market. By the end of 2011, Electric Ireland had a 57% market share (MWhs) in electricity and had captured 1.7% of the gas market. In 2011 the publication of the ‘competition reviews’, reported on the application of the methodology to asses if the thresholds for deregulation had been met in the gas market. This resulted in the business markets being fully deregulated in October 2011. The domestic market in gas is the only remaining retail market sector that is still subject to tariff regulation and as such reported on via the quarterly competition review. Bord Gáis Energy’s domestic market share was 73% for customer numbers and 78% for consumption at the end of Q4 2011. Switching Customer switching is a key indicator of competition and activity in the retail markets continued to show a high level of switching in 2011. Average annual customer churn was approximately 15% for electricity, this dropped from approximately 30,000 switches per month in quarters 1-3 to under 20,000 in quarter 4. The level of switching in the retail market was exceptionally high in 2009 and 2010 as competition developed in the electricity market, so while the year on year level of switching has dropped in 2011, it is still considered to be a very active market in terms of switching rates. Airtricity had the largest net gain in terms of domestic customer switching in 2011. In the gas market, annual switching was also strong with an average annual with rate of 9,500 per month resulting in a switching rate of 17%, although monthly switching slowed in Q4. Switching in the gas market took off in mid 2010, so the year on year comparison is less relevant. As with electricity, Airtricity had the largest net gain in terms of domestic gas customer switching in 2011. Pricing Due to increases in wholesale gas prices, all suppliers announced increases in gas and electricity prices throughout the year. Electricity and Gas prices rose


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relative to the Euro Area average in almost all market sectors with gas domestic being the only sector where all price bands sat below the Euro area average. Customer Protection With the increase in competition and progressive deregulation of the retail markets, the CER has recognised the need for enhanced customer protection and 2011 saw the introduction of a number of customer protection initiatives. These included the proposals on strengthening of the codes of practice to incorporate additional provisions including; minimum charter payments, presentation and publication of tariffs, mandatory notice periods for tariff changes and escalation points on complaint handling. The electricity and gas supply licences were reviewed in 2011. The decision on the revised licences came into effect in March 2012, incorporating changes arising from legislation, regulatory decisions, and market developments. One of the key changes was the inclusion of a new condition making compliance with the codes of practice an explicit condition of both the gas and electricity licences. There was a focus on providing improved information to customers with the launch of the price comparison website accreditation framework. Under the accreditation framework, a website providing an energy price comparison service is only accredited by the CER if it meets defined standards for accuracy, transparency, and reliability. Accredited sites will be audited at least annually to ensure a high standard of service. www.Bonkers.ie became Ireland’s first accredited energy price comparison website in March 2012. The extended rollout of PAYG meters in 2011 meant that more gas and electricity customers were able to benefit from the flexibility and control that this method of payment provides. The focus to date is on the delivery of these meters to customers in financial hardship, for whom the cost of the meter is socialised. While gas PAYG meters had been in operation for some time, the rollout of keypad meters for electricity customers from October 2011, was an evolution in the technology from the older budget controller, token meters. By the end of 2011, 54,450 gas PAYG meters and 1,050 electricity PAYG meters were installed, and approximately 24,000 electricity token meters. Customer Debt & Disconnections In 2011, the economic backdrop to the deregulation of the energy markets was significant change in the financial circumstances of many energy consumers. This more constrained economic environment has prompted consumers to shop around for better deals, benefitting from the competitive market. However, for some customers it has led to arrears and an overall increase in the levels of

http://www.bonkers.ie/


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customer debt. In 2010, the CER identified a significant increase in the level of customer arrears, which resulted in an increase in supply disconnections taking place in both the gas and electricity markets and has continued to monitor this trend 2011. There were 17,236 electricity and 4,560 gas disconnections for reason of non-payment in 2011. Proxy data from the DSOs indicates that a significant number of these disconnections relates to vacant premises, where no customer is in residence. 2011 also saw the introduction of a process of debt flagging which alerted gaining suppliers when a customer in debt, in excess of industry agreed thresholds, was trying to switch supplier consequently leave their debt. The code of practice for disconnection sets out requirements for how suppliers must deal with customers in arrears. During November and December the CER carried out an audit to see asses if suppliers complied with the guidelines for customer disconnection. The audit examined suppliers’ Codes of Practice on Disconnection and established that all suppliers have implemented the published guidelines and are meeting the requirements set out by the CER. The CER noted in its report that in case of all domestic customer accounts audited, suppliers had exceeded the CER’s minimum contact requirements prior to moving to disconnect the customer. The range of initiatives outlined above such as debt flagging and Pay As You Go meters provided suppliers with tools to minimise the number customer disconnections that take place. In addition, the 2010 decision to impose a requirement on suppliers which means that they can only pass on 50% of the cost of a disconnection or reconnection has also provided an effective additional incentive on suppliers on to minimise disconnections. This decision was reviewed in December 2011 and extended for a further 12 months to December 2012. The CER will continue to monitor the retail markets in 2012. The next report covering market data for Q1 2012; market shares, switching, pricing, disconnections, debt flagging and PAYG meters will be published at the end of Q2 2012. In parallel, the CER is also consulting on a new framework for market monitoring which will expand the range of metrics currently reviewed, sourcing information from the Suppliers as well as the DSOs to give a more complete picture of the retail markets as required by the 3rd Package. Once the metrics have been fully defined, the CER will set out the plan for transitioning to the new reporting template.


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Table of Contents

Executive Summary .............................................................................................. 2 1.0 Introduction ..................................................................................................... 8

1.1 The CER for Energy Regulation .................................................................. 8 1.2 Background ................................................................................................. 8

2.0 Overview of Retail Market ............................................................................. 10 2.1 Introduction ................................................................................................ 10 2.2 Trends in Customer Numbers & Demand .................................................. 10

2.2.1 Electricity Market ................................................................................. 10

2.2.2 Gas Market .......................................................................................... 12 2.3 Key Market Actors ..................................................................................... 14

2.3.1 Active Suppliers ................................................................................... 14 2.3.2 Distribution System Operators (DSO) .................................................. 14 2.3.2 Transmission System Operator (TSO) ................................................ 15

2.4 Key Market Developments in 2011 ............................................................ 16 2.5 Summary ................................................................................................... 16

3.0 Market Shares ............................................................................................... 17

3.1 Introduction ................................................................................................ 17 3.2 Electricity ................................................................................................... 17

3.2.1 Domestic Market.................................................................................. 17

3.2.2 Small Business Market ........................................................................ 19

3.2.3 Medium-Sized Business Market .......................................................... 21 3.2.4 Large Energy Users............................................................................. 23

3.3 Gas ............................................................................................................ 25 3.3.1 Domestic ............................................................................................. 25 3.3.2 NDM IC ................................................................................................ 27

3.3.3 Fuel Variation Tariff (FVT) ................................................................... 29 3.3.4 Regulated Tariff Formula (RTF) .......................................................... 31

3.4. Summary .................................................................................................. 33 4.0 Customer Switching ...................................................................................... 34

4.1. Introduction ............................................................................................... 34

4.2 Electricity Switching ................................................................................... 34 4.2.1 Total Switching .................................................................................... 34 4.2.2 Switching Rates ................................................................................... 35 4.2.3 Total Switching by Customer Category ............................................... 35

4.2.4 Switching by Supplier .......................................................................... 37 4.2.5 Electricity New Registrations ............................................................... 38

4.3 Gas Switching ............................................................................................ 39 4.3.1 Total Switching .................................................................................... 39 4.3.2 Switching Rates ................................................................................... 39

4.3.3 Total Switching by Customer Category ............................................... 40 4.3.4 Switching by Supplier .......................................................................... 42 4.3.5 New Gas Registrations ........................................................................ 42

4.4 Summary ................................................................................................... 43


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5.0 Pricing ........................................................................................................... 44 5.1 Introduction ................................................................................................ 44 5.2 Electricity Pricing ....................................................................................... 44

5.2.1 Factors Affecting Electricity Prices in 2011 .......................................... 44 5.2.2 Suppliers Electricity Prices .................................................................. 45 5.2.3 LEU Credits ......................................................................................... 45 5.2.4 European Electricity Price Comparison ............................................... 45

5.3 Gas Pricing ................................................................................................ 47

5.3.1 Suppliers Standard Domestic Tariffs ................................................... 48 5.3.2 Carbon Tax .......................................................................................... 48 5.3.3 European Gas Price Comparison ........................................................ 48

5.4 Summary ................................................................................................... 50 6.0 Customer Protection ..................................................................................... 51

6.1 Introduction ................................................................................................ 51 6.2 Codes of Practice ...................................................................................... 51

6.3 Customer Complaints ................................................................................ 52

6.4 Price Comparison Websites ...................................................................... 52 6.5 Supply Licence Review .............................................................................. 53 6.6 Pay As You Go Meters .............................................................................. 53

6.7 Summary ................................................................................................... 54 7.0 Customer Debt & Disconnection ................................................................... 55

7.1 Introduction ................................................................................................ 55

7.2 Debt Flagging ............................................................................................ 55

7.3 Supply Disconnections .............................................................................. 56 7.3.1 Electricity Disconnections .................................................................... 56 7.3.2 Gas Disconnections ............................................................................. 56

7.3.3 Estimation of Vacant Premises ............................................................ 57 7.4 Summary ................................................................................................... 57

8.0 Conclusions .................................................................................................. 58 8.1 Introduction ................................................................................................ 58 8.2 Next Steps ................................................................................................. 58

Appendix A – Electricity Market Data Tables ...................................................... 60 Appendix B – Gas Market Data Tables ............................................................... 66


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1.0 Introduction

1.1 The CER for Energy Regulation

The Commission for Energy Regulation (‘the CER’) is the independent body responsible for overseeing the regulation of Ireland's electricity and gas sector’s. The CER was initially established and granted regulatory powers over the electricity market under the Electricity Regulation Act, 1999. The enactment of the Gas (Interim) (Regulation) Act, 2002 expanded the CER’s jurisdiction to include regulation of the natural gas market, while the Energy (Miscellaneous Provisions) Act 2006 granted the CER additional powers in relation to gas and electricity safety. The Electricity Regulation Amendment (SEM) Act 2007 outlined the CER’s functions in relation to the Single Electricity Market (SEM) for the island of Ireland. The CER and the Northern Irish Utility Regulator (UR) regulate this market. The CER is working to ensure that consumers benefit from regulation and the introduction of competition in the energy sector.

1.2 Background

The CER has published regular retail market reports since 2008 in order to support the development of retail competition. The information provides transparency on competition and consumer activity to the market and other stakeholders. The reports are published quarterly and contain information on competition metrics including market shares and switching. With the publication of the ‘Roadmaps’ for both electricity and gas there was also a parallel set of reporting, the ‘competition reviews’, which reported on the application of the methodology to asses if the thresholds for deregulation had been met. The domestic market in gas is the only remaining retail market sector that is still subject to tariff regulation and as such reported on via the quarterly competition review. The economic backdrop to the deregulation of the energy markets has been dramatic changes in the financial circumstances of energy consumers. This more constrained economic environment has prompted consumers to shop around for better deals, benefitting from the competitive market. However, for some customers it has led to mounting debt and an overall increase in the levels of supply disconnection. In 2010, the CER identified a significant increase in the level of customer arrears and ultimately supply disconnections taking place in both the gas and electricity markets and has continued to monitor this trend, publishing quarterly data in the interests of customer protection. Other regulatory initiatives related to customer debt have been the implementation of a debt flagging policy and the rollout of Pay As You Go (PAYG) meters in the gas and electricity markets. Trends in debt flagging and PAYG meters have to date been reported with disconnection statistics.


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Due to the timings of the availability of different data sets from the Distribution System Operators (DSOs) these reports have been published separately to date. The market statistics data has been published on a, quarter in arrears, basis whereas the disconnections data has been published a month after quarter end. This report will be the first publication to simultaneously report on the quantitative data in the gas and electricity markets and the customer protection initiatives. In order to facilitate the necessary co-ordination of market reporting, this report will cover data up to the end of 2011 only. The result of this decision is that all data for gas and electricity will be published a quarter in arrears in a single comprehensive document for the market. To implement this it will require that one dataset is held to bring the others into line i.e. disconnections statistics for quarter four of 2011 has already been published, so the numbers for first quarter of 2012 will not be published until the end of the second quarter, 2012. However, the CER will continue to monitor the data as it becomes available. In relation to the gas market only, the current method of calculation of gas volumes supplied and market share uses Non Daily Metered (NDM) allocations data, which is derived statistically. Bord Gáis Networks (BGN) has recently proposed that the this method of calculation is not the most statistically accurate, and when compared with reconciliation data (i.e. metered throughput) that allocation data has accuracy in the range of +/-15% for NDM IC’s and +/-4% for Residential. BGN has proposed that a different methodology, using Annual Quantity, basis for calculation of market shares for the NDM sector. This proposed new methodology will be consulted on in the near future. The allocations methodology is used in this report for consistency with previous gas reporting.

In 2011 the transposition of the 3rd

Package also placed new responsibilities on CER regarding market monitoring and the CER is currently consulting on a new framework for market monitoring which will expand the range of metrics currently reviewed, sourcing information from the Suppliers as well as the DSOs to give a more complete picture of the retail markets. This single quarterly report will provide for a smoother transition to the new monitoring framework. The one exception to this report is the gas domestic market, where quarterly competition review is published a month after quarter end. While the standard quarterly report will include gas domestic statistics, the competition review applies a forecast methodology as set out in the gas Roadmap. This is essential to give the market an indication of where trends are going vis à vis the deregulation decision. The competition review will continue to be published a month after quarter end but will be published in parallel with the standard retail report. The CER intends that this report will prove to be a useful reference for suppliers and industry participants monitoring trends and changes in market features.


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2.0 Overview of Retail Market

2.1 Introduction

This section gives a general overview of the market setting out the high level market statistics for 2011; the overall size of the market in terms of customer numbers and consumption, year on year trends and forecasts for the next 5/7 years. This section also lists the key market actors, the market segments they operate in and the key market developments in 2011.

2.2 Trends in Customer Numbers & Demand

Market update data is presented in terms of actual customer numbers and market volume (MWhs) as well year on year trends for all electricity and gas market segments.

2.2.1 Electricity Market

In total, at the end of Q4 2011, there were 2,239,417 customers in the retail market, and a total of 24,492 GWhs was consumed during 2011. Customer number increased slightly in the domestic market from Q3 to Q4, while there was a slight fall in the small business market over the same period. The medium business and the large energy user (LEU) market saw a slight increase in customer numbers over the year. Table 2.1 presents consumption figures by quarter for 2011. Table 2.1 shows the domestic and small business markets vary considerably from the summer to the winter quarters, where as the medium business and LEU demand is relatively stable throughout the year.

2011 (Customer Nos.)

2011 (MWhs)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Domestic 2,021,518 2,021,951 2,022,237 2,022,696 2,646,581 1,980,429 1,930,102 2,407,772

Small Business 191,656 191,075 190,909 190,708 1,097,055 872,190 869,517 984,173

Medium Business 24,196 24,236 24,301 24,366 1,075,936 994,169 1,018,248 1,078,369

LEU 1,623 1,626 1,638 1,647 1,857,983 1,891,498 1,915,160 1,873,620

Total 2,238,993 2,238,888 2,239,085 2,239,417 6,677,554 5,738,287 5,733,027 6,343,932

Table 2.1 Retail Electricity Market Data 2011

Table 2.2 shows a year on year comparison for both customer numbers and consumption. Customer numbers had a slight increase from 2010 to 2011 in domestic, medium business and LEU markets. The small business sector saw a decline in customer numbers. Consumption was down across all sectors compared to 2010 levels. The small business market saw a decrease of 3.9%


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(MWhs) while the domestic and medium business sectors saw a decrease of 2.5% and 2.2% respectively.

2010 (Customer

Nos.)

2011 (Customer

Nos.) %

Variance 2010

(MWhs) 2011

(MWhs) %

Variance

Domestic 2,019,965 2,022,696 0.1% 9,190,958 8,964,884 -2.5%

Small Business 191,505 190,708 -0.4% 3,977,069 3,822,935 -3.9%

Medium Business 24,211 24,366 0.6% 4,259,037 4,166,722 -2.2%

LEU 1,616 1,647 1.9% 7,552,830 7,538,261 -0.2%

Total 2,237,297 2,239,417 0.1% 24,979,894 24,492,800 -1.9%

Table 2.2 Retail Electricity Market Data Comparison 2010 / 2011

Tables 1-6 in Appendix A show the historic trends in trends in customer numbers and consumption from 1998 – 2011 and the 7-year forecast data for the period up to 2018. Figures 2.1 and 2.2 show trends in customer numbers and consumption for over that period.

Figure 2.1 Electricity Customer Numbers: Historic & Forecast Data 1997-2016


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Figure 2.2 Electricity Consumption: Historic & Forecast Data 1997-2018

2.2.2 Gas Market

At the end of 2011, there were 651,924 customers in the retail gas market excluding Powergen who consumed a total of 17,724 GWhs during 2011. If the 18 Powergen customers are included, the total consumption is 52,317 GWhs. The total GWhs for 2011 and the total customer numbers for the end of 2011 are shown in table 2.3.

2011 (Customer Nos.)

2011 (GWhs)

Domestic 627,175 7,341

NDM IC 22,773 1,616

FVT 1,729 2,086

RTF 243 5,353

Above RTF 4 1,328

Powergen 18 34,593

Total 651,942 52,317

Table 2.3 Retail Gas Market Data 2011

As table 2.4 below shows, there was an increase in customer numbers in all bar one sector. The largest rise was in the NDM IC sector which has a 2.4% rise. In GWhs, there was significant falls in both the domestic and NDM IC sectors, which decreased 19.8% and 12.60% respectively. The FVT market sector experienced a fall of 7.9% while there was a slight increase in GWhs in the RTF market. While there are no longer regulated business tariffs in gas, this report refers to this previous categorisation to allow for trend analysis.


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2010 (Customer

Nos.)

2011 (Customer

Nos.) %

Variance 2010

(GWhs) 2011

(GWhs) %

Variance

Domestic 621,864 627,175 0.86% 9,153 7,341 -19.80%

NDM IC 22,237 22,773 2.41% 1,849 1,616 -12.60%

FVT 1,702 1,729 1.59% 2,264 2,086 -7.86%

RTF 240 243 1.25% 5,299 5,353 1.02%

Above RTF 4 4 0.00% 1,324 1,328 0.30%

Powergen 16 18 12.50% 39,605 34,593 -12.65%

Total 646,063 651,942 0.9% 59,494 52,317 -12.06%

Table 2.4 Retail Gas Market Data Comparison 2010 / 2011

Tables 7-8 in Appendix B show the historic trends in consumption from 2002 and the 7-year forecast data for the period up to 2019. Figure 2.3 shows the trends in consumption for over that period. It was intended to present gas customer number data, similar to electricity; however, this was not available and will be contained in the next report.

Figure 2.3 Gas Consumption: Historic & Forecast Data 2002-20201

1 Data from Joint Gas Capacity Statement 2011 – CER 11/145


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2.3 Key Market Actors

The section gives an outline of the key participants in the retail market in Ireland.

2.3.1 Active Suppliers

There were 7 active suppliers2 in the ROI electricity retail business and domestic market in 2011. One of these suppliers, Pre Pay Power commenced operation exclusively in the retail domestic electricity prepayment market. There were 8 active suppliers3 in the gas retail business and domestic market in 2011 but there were no new market entrants. Figure 2.4 shows all the suppliers active in the gas and electricity markets and in what market i.e. business, domestic and dual fuel.

Figure 2.4 Suppliers Serving the Retail Electricity and Gas Markets in 2011

2.3.2 Distribution System Operators (DSO)

ESB Networks (ESBN) and Gaslink are licensed as the DSOs for the electricity and gas markets respectively. Their roles are as the neutral market facilitators for the gas and electricity retail markets. Bord Gáis Networks (BGN) operate and maintain the gas network on behalf of Gaslink.

2 Airtricity, Bord Gáis Energy, Electric Ireland, Endesa Ireland, Energia, Pre Pay Power and Vayu.

3 Airtricity, Bord Gáis Energy, Electric Ireland, Energia, Flogas, Gazprom, Phoenix and Vayu.


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The DSOs are responsible for building, operating, maintaining and developing the distribution networks and serving all electricity and gas customers in the Republic of Ireland. As Meter Operators, ESBN and BGN install, maintain and read all electricity and gas meters. The Retail Market Design Service (RMDS) is the "ringfenced" function within ESB Networks responsible for all aspects of the retail electricity market design on behalf of the CER. The Meter Registration System Operator (MRSO) is a another "ringfenced" function within ESB Networks responsible for the Change of Supplier process and the communication/aggregation of meter data required to support Trading and Settlement in the All Island competitive electricity market. The CER approves distribution use of system charges (DUoS) and other service charges applied by ESBN in its role as DSO. The charges are approved each year by CER4. The CER also approves siteworks charges, which are applied by BGN as DSO5.

2.3.2 Transmission System Operator (TSO)

Eirgrid as the Electricity TSO has a key role in the retail market and is responsible for the operation of the Single Electricity Market through SEMO, the Single Electricity Market Operator. Eirgrid also operates the Winter Peak Demand Reduction Scheme6 (WPDRS), which was introduced in Winter 2003/04 as an incentive to business customers to reduce electricity consumption during the power system's peak hours (5pm-7pm) in winter months. EirGrid, on behalf of the CER, administers the Powersave7 Scheme. The scheme incentivises Registered Powersave Customers to reduce electricity demand or increase electricity exports on request from EirGrid. EirGrid operates and maintains a safe, secure, reliable, economical and efficient transmission system, as well as developing key infrastructural projects. Current projects include the East West Interconnector, Meath-Cavan and Cavan-Tyrone lines. As TSO, EirGrid is regulated by the Commission for Energy Regulation (CER). Gaslink is the TSO and DSO for the gas network in Ireland. BGN owns, operates, builds and maintains the natural gas network in Ireland and connect all customers to the network. BGN carries out these activities on behalf of Gaslink.

4 ESB Networks Statement of Charges - CER 11/228

5 Bord Gais Networks Siteworks Charges for 2012 - CER12/041

6 Winter Peak Demand Reduction Scheme Rules - CER 11/815

7 Powersave Scheme Rules

http://www.cer.ie/en/electricity-distribution-network-decision-documents.aspx?article=3ad781dc-75ad-4007-ae6b-6aca896ee0be

http://www.cer.ie/en/gas-distribution-network-decision-documents.aspx?article=bb4768ef-ab2f-403b-aecd-ae1a3d763f59

http://www.cer.ie/en/electricity-retail-market-current-consultations.aspx?article=1fee8ce6-3f35-4345-8481-dd4d399e45bb&mode=author

http://www.eirgrid.com/media/Powersave%20Rules.pdf


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2.4 Key Market Developments in 2011

2011 was a very significant year in the development of retail competition with the full deregulation of the electricity market in April 2011 and the deregulation of all gas business markets in October 2011. The final decision on the removal of all obligations of tariff regulation from (formerly) ESB Customer Supply was a major milestone, which opened the way for further competitive pressure in the electricity and gas markets. As per the requirements of the deregulation Roadmap, the ESB supply companies completed the branding transition to Electric Ireland. All dual branding activities were complete by end December 2011. The deregulation decision saw Electric Ireland promote a range of single and dual fuel offers, taking a position in the gas market. By the end of 2011, Electric Ireland had increased its market share (MWhs) in electricity to 57% and captured 1.7% of the gas market. There was also a parallel set of reporting, the ‘competition reviews’, which reported on the application of the methodology to asses if the thresholds for deregulation had been met in the gas market. This resulted in the business markets being fully deregulated in October 2011. The domestic market in gas is the only remaining retail market sector that is still subject to tariff regulation and as such reported on via the quarterly competition review. Bord Gáis Energy’s domestic market share was 73% for customer numbers and 78% for consumption at the end of 2011

2.5 Summary

2011 was a very significant year in the development of retail competition with the full deregulation of the electricity market in April 2011 and the deregulation of all gas business markets in October 2011. Overall, the retail markets contracted in 2011 in terms of total consumer consumption. A year on year comparison shows that consumption was down across all electricity retail sectors compared to 2010 MWhs. The small business sector saw a decline in customer numbers. In the gas market, there were significant decreases in consumption in the domestic and NDM IC sectors. 4 new supply licences were issued in 2011, with all 4 issued in electricity. There were 7 active suppliers in the ROI electricity retail business and domestic market in 2011. There were 8 active suppliers in the gas retail business and domestic market in 2011 but there were no new market entrants. 3 suppliers operate in the domestic market offering dual fuel products.


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3.0 Market Shares

3.1 Introduction

This section contains the market share data for all electricity and gas suppliers. Data is presented in terms of actual customer numbers and market volume (MWhs) as well as showing trends in market share since the first quarter of 2009.

3.2 Electricity

The deregulation market share thresholds of 50% for business and 60% for domestic (consumption) were set out in the Roadmap for the electricity market. As discussed in section 2.4, the electricity market was fully deregulated in April 2011.

3.2.1 Domestic Market

The domestic market refers to residential customers with an urban (DG1) or rural (DG2) connection to the low voltage network. Table 3.1 shows the customer numbers for each supplier at the end of 2011, and consumption. Overall, domestic consumption in Q4 2011 was down from 2,537,599 MWhs in Q4 2010, possibly due to milder weather in Q4 2011.

Customer No's MWhs

Electric Ireland 1,280,043 1,369,325

Airtricity 354,737 482,662

Bord Gáis 382,386 546,195

Others 5,530 9,590

Total 2,022,696 2,407,772

Table 3.1 Domestic Market Customer Numbers and Consumption (MWhs) in Q4 2011

Figures 3.1 and 3.2 show the market share in terms of customer numbers and MWhs for the fourth quarter of 2011. Electric Ireland’s market share in terms of customer numbers has increased slightly relative to Q3 levels, while Bord Gáis Energy customer numbers have declined slightly from Q3 levels. In terms of MWhs supplied, Electric Ireland’s MWh market share has risen by over 1 % from Q3 2011 levels. Bord Gáis Energy MWhs market share has dropped by over 2% from Q3, while Airtricity’s share increased by nearly 1% from Q3 2011. Electric Ireland’s market share (MWh) is still below the threshold of 60% which was set out in the electricity Roadmap. There are also two independent suppliers with over 10% market share, which satisfies the market share criteria. The final criterion set out was that domestic switching rates had to be above 10%; this is also satisfied and is presented in the switching section of this report.


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Figure 3.1 % Domestic Market Share

(Customer Nos) Q4 2011

Figure 3.2 % Domestic Market Share

(MWh) in Q4 2011

Figures 3.3 and 3.4 show the domestic market share trends in terms of customer numbers and MWhs from Q1 2009 to Q4 2011. As can be seen Electric Ireland’s market share in the domestic market has declined steadily since the market entry of both Bord Gáis Energy and Airtricity in early 2009 until the middle 2011. Since full deregulation Electric Ireland’s market share of customer numbers has stabilised, registering a very slight increase on Q3 levels while its share of consumption has risen slightly from Q2/Q3 2011 levels, 55.42%. Over the same period Airtricity has seen a rise in both customer numbers and MWhs, while Bord Gáis Energy has seen a fall in customer numbers and consumption levels from Q3 2011.

Figure 3.3 Domestic Market Share Trend (Customer Nos) Q1 2009 to Q4 2011


19

Figure 3.4 Domestic Market Share Trend (MWHs) Q1 2009 to Q4 2011

3.2.2 Small Business Market

Small Business customers are those with a Low Voltage Non-Maximum Demand (DG5) connection. Table 3.2 present customer numbers and consumption for Q4 by supplier for the small business market. Overall numbers for customer numbers and consumption were down on the same period in 2010. Customer numbers fell from 191,505, while consumption was down from 1,031,855 MWhs in Q4 2010.

Customer No's MWhs

Electric Ireland 89,693 302,729

Energia 44,392 361,734

Airtricity 35,465 183,906

Bord Gáis 21,102 135,057

Others 56 746

Total 190,708 984,173

Table 3.2 Small Business Market Customer Numbers and Consumption (MWhs) in Q4 2011

Figures 3.5 and 3.6 below show the market share in terms of customer numbers and MWhs for the fourth quarter of 2011. The only significant change was a gain by Airtricity of over 2%. Electric Ireland registered no significant change in customer numbers. In terms of MWhs, Bord Gáis Energy lost over 1% of market share from Q2/Q3 levels while Electric Ireland gained over 1.5% over the same period. Energia and Airtricity remained stable in terms of MWhs.


20

Figure 3.5 % Small Business Market

Share (Customer Nos) Q4 2011

Figure 3.6 % Small Business Market

Share (MWh) in Q4 2011

Figures 3.7 and 3.8 show the market share trend in customer numbers and MWhs from Q1 2009 to Q4 2011. Electric Ireland’s market share continued to decline through 2009 and most of 2010. However, Electric Ireland’s market share saw a slight increase in consumption of over 1.5% from Q3 2011 levels. Since the business market was fully deregulated in October 2010, Energia has increased its share of customer numbers and MWhs up to Q3 2011. MWhs supplied continued to increase for Energia in Q4, but customer numbers have dropped for the first time since Q4 2010. Airtricty saw an increase of over 2% in customer numbers from Q3, but MWhs levels dropped slightly. Bord Gáis Energy, registered drops of over 1% in customer numbers and MWhs

Figure 3.7 Small Business Market Share Trend (Customer Nos) Q1 2009 to Q4 2011


21

FFigure 3.8 Small Business Market Share Trend (MWHs) Q1 2009 to Q4 2011

3.2.3 Medium-Sized Business Market

Medium-Sized Business customers are those with a Low Voltage Maximum Demand (DG6) and Public Lighting (DG3) connections. Table 3.3 shows customer number and consumption in the medium- sized business market for Q4 2011. Overall customer numbers have increased from 24,211 in Q4 2010, while MWhs has decreased from 1,105,392 in Q4 2010.

Customer No's MWhs

Electric Ireland 14,006 295,381

Energia 5,576 400,660


Bord Gáis 1,637 126,235

Others 66 6,478

Total 24,366 1,078,369

Table 3.3 Medium Business Market Customer Numbers and Consumption (MWhs) in Q4 2011

Figures 3.9 and 3.10 show the market share in terms of customer numbers and MWhs for Q3 2011.The medium sized business market remained stable with Energia seeing a slight increase in consumption from Q2/Q3, while all other major suppliers saw a slight decrease.


22

Figure 3.9 % Medium Business Market Share


Figure 3.10 % Medium Business Market

Share (MWh) in Q4 2011

Figures 3.11 and 3.12 show the market share trend in terms of customer numbers and MWhs from Q1 2009 to Q4 2011. Similar to the picture in the small business market we can see that Electric Ireland’s market share declined through 2009 and most of 2010 and in particular in terms of their share of MWhs supplied. This trend has continued through 2011, with Electric Ireland markets share decreasing in customer numbers and consumption although its rate of change has slowed down. Since the business market was fully deregulated in October 2010 the changes in market share between the four major suppliers in the medium-sized business market has been less pronounced.

Figure 3.11 Medium-Sized Business Market Share Trend (Customer Nos) Q1 2009 to Q4 2011


23

Figure 3.12 Medium-Sized Business Market Share Trend (MWHs) Q1 2009 to Q4 2011

3.2.4 Large Energy Users

LEU customers are those with DG 7, 8, 9, 10 & TCON connections. Table 3.4 below shows total LEU market customer numbers and consumption for Q4 2011. There was an increase in LEU customer numbers from 1,616 in Q4 2011. MWhs fell slightly from 1,873,917 in Q4 2011. Figures 3.13 and 3.14 show market shares in terms of customer numbers and MWhs for Q4 2011.

Customer No's MWhs

Electric Ireland 793 907,692

Energia 266 375,788

Airtricity 329 268,955

Bord Gáis 172 160,260

Vayu 51 25,050

Others 36 135,874

Total 1,647 1,873,620

Table 3.4 LEU Market Customer Numbers and Consumption (MWhs) in Q4 2011


24

Figure 3.13 % LEU Market

Share (Customer Nos) Q4 2011

Figure 3.14 % LEU Market Share (MWh) in Q4 2011

Figures 3.15 and 3.16 show market share trends in customer numbers and MWhs from Q1 2009 to Q4 2011. The LEU market was the first to see competition develop and therefore the market is more mature than the other three market segments. Energia and Vayu show an increase of over 1% in customer numbers from Q2/Q3, Electric Ireland a loss of over 1% over the same period. Airtricity had a 1% increase in customer numbers, while the other suppliers remained relatively unchanged. In terms of MWhs, Energia’s share declined in all 4 quarters of 2011, registering a decline of over 1% from Q3. Airtricity had an increase in MWhs of over 1% from Q3 levels. All other suppliers’ market share remained stable relative to Q3 levels.

Figure 3.15 Large Energy Users Market Share Trend (Customer Nos) Q1 2009 to Q4 2011


25

Figure 3.16 Large Energy Users Market Share Trend (MWHs) Q1 2009 to Q4 2011

3.3 Gas

The gas business market was fully deregulated in October 2011. The deregulation market share thresholds of 50% for business (consumption) and 60% for domestic (customer numbers) were set out in the Roadmap for the gas market. As discussed in section 1.2, the current method of calculation of gas volumes supplied and market share uses NDM allocations data which is derived statistically but a new methodology will be consulted on shortly.

3.3.1 Domestic

The domestic gas market refers to NDM Residential customers. Table 3.7 sets out customer numbers and consumption. By the end of 2011, the domestic gas market had not met all the required criteria for deregulation, while there were at least three active suppliers in the market, at the time only two of these have a market share greater than 10%. Bord Gáis Energy’s market share at 73% was above the required threshold of 60% (defined in terms of customer numbers in the gas market Roadmap). Another requirement for the domestic sector is that the annual switching rate is greater than 10%, this was been met as the switching rate for the gas domestic sector over the 12 months to end 2011 was approximately 17%8. The CER is continuing to monitor the development of competition in the domestic gas market9 and the Competition Review for Q1 201210 is published alongside this document.

8 In 2011 approximately 109,267 domestic customers switched supplier

9 Roadmap for Deregulation in the Non-Daily Metered Retail Gas Market CER11/071

10 Review of the Regulartory Framework for the Gas Retail Market Competition Review Q1-2012

CER12/067


26

Customer No's GWhs


BG Energy 457,038 5,717

Electric Ireland 28,499 127

Flogas 22,880 223

Total 627,175 7,341

Table 3.7 Domestic Market Customer Numbers and Consumption (GWhs) total for 2011

Both Airtricity and Electric Ireland continue to gain market share while Bord Gáis Energy’s market share by customer numbers has declined by 2% since Q3 and by 12% since the start of 2011. Flogas has seen no major change to its residential market share over the course of 2011. This data is presented in figures 3.17 and 3.18. Airtricity has a 19% market share in terms of customer numbers at the end of 2011 while it has 17% of GWhs. Flogas and Electric Ireland both had a 4% share of customer number at the end of 2011.

Figure 3.17 % NDM Residential Market Share (Customer Nos) Q4 2011

Figure 3.18 % NDM Resindential

Market Share (GWh) in Q4 2011

Figures 3.19 and 3.20 show the market share trends in terms of customer numbers and GWhs from the end of 2009 to 2011. In terms of customer numbers, Bord Gáis Energy’s market share has decreased from 98% in 2009 to 73% at the end of Q4 2011. In MWh, Bord Gáis Energy’s market share is down to 78% from 98.4% in 2009.


27

Figure 319 Domestic Market Share Trend (Customer Nos) 2009 – 2011

Figure 3.20 Domestic Market Share Trend (GWhs) 2009 - 2011

3.3.2 NDM IC

The NDM IC market is for business customers with a Supply Point Capacity below 3,750kWh and consumption level below 73,000kWh of gas annually. NDM IC market has been deregulated since the 1st October 2011. Table 3.8 gives the breakdown of actual customer numbers and GWhs. When Bord Gáis Energy’s market share fell below the threshold of 50% set out in the Roadmap.

Customer No's GWhs

Airtricity 863 19

BG Energy 11,681 737

Electric Ireland 287 5

Energia 4,588 415

Flogas 4,802 377

Phoenix 3 1

Vayu 549 63

Total 22,773 1,616

Table 3.8 NDM IC Market Customer Numbers and Consumption (MWhs) in Q4 2011


28

Figures 3.19 and 3.20 show the NDM IC percentage market share in terms of customer numbers and GWhs. The Bord Gáis Energy market share of GWhs in NDM IC has fallen by 1% from Q3 2011 levels of customer numbers have also declined by 1%. Flogas share of GWh has increased by 2% from Q3 while all other suppliers remain at relatively stable levels.

Figure 3.19 % NDM IC Market Share


Figure 3.20 % NDM IC Market Share (MWh)

Q4 2011

Figures 3.21 and 3.22 show the market share trends in terms of customer numbers and GWhs, for the NDM IC market, from the end of 2009 to end of 2011. Bord Gáis Energy’s market share has declined from 74% at the end of 2009 to 51% at the end of 2011 for customer numbers. Bord Gáis Energy had 46% at the end of 2011 down from 81% at the end of 2009. Both Energia and Flogas have has gains of 11% and 20% respectively in GWhs over the same period while Flogas gained 15% in customer numbers. Energia had an increase of just over 1% in customer numbers.

Figure 3.21 NDM IC Market Share Trend (Customer Nos) 2009 - 2011


29

Figure 3.22 NDM IC Market Share Trend (GWhs) 2009 - 2011

3.3.3 Fuel Variation Tariff (FVT)

While there are no longer regulated business tariffs, the reporting structure has been maintained in this report for consistency and comparison. The FVT customer category refers to NDM gas consumers with a Supply Point Capacity above 3,750kWh and consumption level above 73,000kWh gas annually. Table 3.9 presents actual customer numbers and GWhs by supplier in Q4 2011.

Customer No's GWhs

Airtricity 87 64

BG Energy 685 960


Energia 248 343

Flogas 314 323

Phoenix 2 2

Vayu 392 393

Total 1,729 2,086

Table 3.9 FVT Market Customer Numbers and Consumption (GWhs) in Q4 2011

Figures 3.23 and 3.24 show the FVT market share in terms of customer numbers and consumption. The FVT market was deregulated on 1st October 2011. Bord Gáis Energy’s market share in customer numbers and consumption declined by 2% and 3% from respectively from Q3 2011 levels. Energia saw a 2% increase in GWhs over the same period while Flogas saw a 2% rise in both customer numbers and consumption. Vayu saw a 2% increase in GWhs from Q3 levels with Airtricity gaining 1% market share in both categories.


30

Figure 3.23 % FVT Market Share (Customer Nos) Q4 2011

Figure 3.24 % FVT Market Share (GWh)

Q4 2011

Figures 3.25 and 3.26 show the market share trends in terms of customer numbers and GWhs, for the FVT market, from the end of 2009 to end of 2011. Bord Gáis Energy has decreased 30% in customer numbers, and 36% in GWhs since the end of 2009. In terms of customer numbers the largest gain, over the same period was by Flogas with 13% and Vayu with 9%. In GWhs, Vayu had a gain of 11%, while Flogas had a 13% gain.

Figure 3.25 FVT Market Share Trend (Customer Nos) 2009 – 2011


31

Figure 3.26 FVT Market Share Trend (GWhs) 2009 - 2011

3.3.4 Regulated Tariff Formula (RTF)

As for the FVT, while there is no longer a Regulated Tariff Formula (RTF), the reporting structure has been maintained for consistency and comparison. The RTF customer category refers to customers with an annual consumption of between 5.5 GWhs and 264 GWhs. The RTF market was deregulated on 1st October 201011. Table 2.10 shows the actual customers number and GWhs by suppliers. At the end of 2011 Vayu had the largest market share in terms of customer numbers at 28% while Bord Gáis is still had the largest in terms of GWhs as shown in figures 3.27 and 3.28.

Customer No's GWhs

Airtricity 15 310

BG Energy 61 1,288


Energia 50 1,234

Gazprom 9 963


Vayu 69 1,016

Total 243 5,353

Table 2.10 RTF Market Customer Numbers and Consumption (GWhs) in Q4 2011

Energia and Gazprom saw a 5% increase in GWhs, Phoenix and Electric Ireland 4% increases and Airtricity a 3% increase in consumption. In terms of Customer numbers Bord Gáis Energy’s market share has declined by 8% from the end of 2010 while Energia also saw an 8% decrease in customer numbers. Phoenix saw a 6% rise in customer numbers with Vayu recording a 7% rise. Electric Ireland had a 3% rise in customers with Gazprom and Airtricity both recorded 1% increases.

11

Review of the Regulated Tariff Formula - CER 10/088

http://www.cer.ie/en/gas-retail-market-decision-documents.aspx?article=5a9e0498-cc54-44f9-b055-924c7ee5263f


32

Figure 3.27 % RTF Market Share (Customer

Nos) Q4 2011

Figure 3.28 % RTF Market Share (GWh) Q4

2011

Figures 2.29 and 2.30 show the market share trends in terms of customer numbers and GWhs, for the RTF market, from the end of 2009 to end of 2011. For customer numbers, Bord Gáis Energy’s market share is at 25%, down from 42% at the end of 2009. Energia had a decrease from 32% to 21% over the same period. The largest gains were by Phoenix and Electric Ireland who gained 9% and 6% respectively. Gazprom experienced a small increase in customer numbers and a 10% increase GWhs. At the end of 2011 Bord Gáis Energy’s market share in GWhs is now at 24% down from 40% at the end of 2009. Energia GWhs market share is now at 23% from 33% at the end of 2009.

Figure 3.29 RTF Market Share Trend (Customer Nos) 2009 – 2011


33

Figure 3.30 RTF Market Share Trend (GWhs) 2009 - 2011

3.4. Summary

In electricity, Electric Irelands market share of MWhs in the domestic rose slightly from Q3 2011 levels, but remains below the threshold of 60%. In gas, Bord Gáis Energy’s market share of domestic customer numbers is at 73%, down by 2% from Q3, however this is well above the expected required threshold of 60% or below. For electricity small business customers, in terms of MWhs, Bord Gáis Energy lost over 1% of market share from Q2/Q3 levels while Electric Ireland gained over 1.5% over the same period. In gas, Bord Gáis Energy market share of GWhs has fallen by 1% from Q3 2011 levels of customer numbers have also declined by 1%. Flogas share of GWh has increased by 2% from Q3 while all other suppliers remain at relatively stable levels.


34

4.0 Customer Switching

4.1. Introduction

Customer switching is a key indicator of retail competition and supplier activity within the retail market. This section contains a description of customer switching activity with a breakdown of suppliers’ switches in the relevant markets and new registrations

4.2 Electricity Switching

Switching in the following section is calculated as the total gains for each supplier not including new customer registrations. The switching rate is calculated by dividing the total customer numbers in a sector by the total number of switches in that sector in a given period.

4.2.1 Total Switching

Overall customer switching in 2011, across all market sectors, has declined from the peak of 35,000 in July 2011 down to under 19,000 in December 2011. While the domestic market has seen a significant decline in switching rate from the peak the market maintains a very healthy level of domestic churn at 15% in 2011 when compared with international levels. As figure 4.1 below shows, domestic switches account for the majority of all switches.

Figure 4.1 Total Electricity Switching in all Sectors in 2011


35

4.2.2 Switching Rates

One of the key criteria for market deregulation was the domestic switching rate which had to be over 10%. As figure 4.2 below shows, domestic switching rates are at 15% thus satisfying the deregulation criteria. Switching rates for 2011 have dropped by over 6% from 2010 levels. Switching rates have dropped across all market sectors in 2011, with the medium sized business market falling below 10%.

Figure 4.2 Electricity Switching Rates in all Sectors in 2009-11

4.2.3 Total Switching by Customer Category

Figures 4.3, 4.4, 4.5, and 4.6 below show the monthly switches in all market segments since January 2009. Figure 4.3 shows how domestic switching peaked in the first six months of 2009 following the entry of Bord Gáis Energy and Airtricity to the domestic market. During 2010 and the up until the summer of 2011, switching rates decreased slightly but remained relatively high. From the end of the summer, the level of switching has dropped from 30,000 a month to around 14,000 a month at the end of Q4 2011.


36

Figure 4.3 Monthly Electricity Switches by Domestic Customers 2009-11

The small and medium-sized business markets received a boost to switching rates following the knock-on effect of competition in the domestic market from 2009. The more erratic nature of switching levels in these markets may reflect seasonal and contractual influences. Similarly, switching levels in the LEU market tend to be influenced by renewal dates for contracts around October and January each year.

Figure 4.4 Monthly Electricity Switches by Small Business Customers 2009-11


37

Figure 4.5 Monthly Electricity Switches by Medium-Sized Business Customers 2009 -11

Figure 4.6 Monthly Electriicty Switches by Large Energy Users 2009-11

4.2.4 Switching by Supplier

Figure 4.7 below shows the net volume of switching by Suppliers. Electric Ireland had a net gain for the first time since the electricity markets were opened to competition in 2005. This coincided with the deregulation of the domestic market on the 4th April 2011, when Electric Ireland was allowed set its own prices, and made a number of number commercial offers to domestic customers. Bord Gáis Energy sustained a net monthly loss since April 2011. Airtricity continued to maintain a net increase in switching in 2011.


38

Figure 4.7 Monthly Electicity Switching by Supplier 2010 - 11

4.2.5 Electricity New Registrations

ESB Networks defines a new registration as the situation where a customer who has moved into a site, which has been de-energised for at least 3 months and has remained vacant during that period. Sites normally remain registered to a supplier for 3 months after they are de-energised. If a new customer moves in within the three months then that is not counted as a new registration. If however the site was vacant for the full three months, the site would be deregistered from that supplier. If after three months, a new customer moved into the site then that would be counted as a new registration. Table 4.1 below shows that 93% of all new registrations, between January 2010 and December 2011, are registered with Electric Ireland. Figure 4.8 shows the trends of new registration numbers by supplier.

% Share New Registrations Jan 10 - Dec 11

Electric Ireland 35,303 93%

Energia 970 3%

Airtricity 944 2%

Bord Gais Energy 924 2%

Others 5 0%

Total 38,146 100%

Table 4.1 Suppliers % Share of New Registrations across all Market Sectors


39

Figure 4.8 New Electricity Registrations by Supplier

4.3 Gas Switching

Switching in the following section is calculated as the total gains for each supplier not including new customer registrations. The switching rate is calculated by dividing the total customer numbers in a sector by the total number of switches in that sector in a given period.

4.3.1 Total Switching

Total customer switching in up on 2010 has remained relatively stable throughout the year reaching a peak of over 12,000 switches per month in July with an average of 9,500 switches per month throughout the year across all market sectors. As shown in section 3.3, Bord Gáis Energy has continued to lose market share, with an average net loss of 6,250 customers per month. The breakdown by sector in section 4.3.3 shows that residential switching constitutes the majority of switches in gas. In 2011 there were 108,938 switches in the residential market.

4.3.2 Switching Rates

Figures 4.9 and 4.10 below show the switching rates for residential sector and all business IC sectors. The switching rate for residential has risen from 14.5% in 201012 to 17.4%13 in 2011. Domestic competition only commenced in July 2010. The IC switching rate has also increased from 16.1% to 17.6 % over the same period.

12

In 2010 approximately 90,036 dometic customers switched supplier. 13

In 2011 approximately 108,938 domestic customers switched supplier.


40

Figure 4.9 Total Gas switching across all markets sectors 2010 - 11

Figure 4.10 Gas Switching rates by Sector

4.3.3 Total Switching by Customer Category

Residential customers are responsible for the majority of switches in gas IC switches account for approximately 200 switches in December 2011. Figure 4.11 shows switching in the residential market dropped from a peak in 2010 to 2011, reaching a peak of over 11,500 in July 2011 to 7,800 in December 2011with an average figure of slightly over 9,500 per month throughout 2011.


41

4.11 Monthly Gas Switches by Domestic Customers 2010 -11

Figure 4.12 shows switching in the IC market dropped from a peak in late 2010 to an average of approximately 200 in late 2011.

Figure 4.12 Monthly Gas Switches by IC Customers 2010-11


42

4.3.4 Switching by Supplier

Figure 4.13 shows the monthly net volumes of switching by supplier in 2010-11. Prior to March 2011, Bord Gáis Energy and Airtricity were the only suppliers who had large volumes of customer switches. The graph shows that Airtricity’s gains closely matched losses from Bord Gáis Energy. After Electric Ireland entered the market in March 2011, Airtricity’s net customer gains decreased considerably from 7,000 in March 2011 to 430 in December 2011. Bord Gáis Energy’s net losses have slowed down from over 8,000 per month in January 2011 to less than 4,500 per month in December 2011. The demonstrates a slowdown in switching activity in the gas market in 2011.

Figure 4.13 Monthly Gas Switching by Supplier 2010 – 11

4.3.5 New Gas Registrations

BGN defines a new registration as the situation where a new meter is fitted or a meter is unlocked at GPRNs where there is no supplier registered. A registration unlock is where the site has been locked for greater than 18 months and there has been no consumption since the lock was carried out and no customer registered. Table 4.2 below shows each supplier’s percentage of new registrations. Figure 4.14 shows the trend of new registrations by supplier from January 2010.


43

% Share of New Gas Registrations Jan-10 - Dec-11

Airtricity 573 4%

Bord Gáis Energy 13,580 83%

Electric Ireland 589 4%

Flogas 1,366 8%

Energia 176 1%

Vayu 52 0%

Total 16,336 100%

Table 4.2 Suppliers Share of New Gas Registrations

Figure 4.14 Gas Registrations by Supplier

4.4 Summary

In the electricity market, switching declined from the peak of 35,000 in July 2011 to under 19,000 in December 2011. The switching rate remained at 15% for the domestic market, which is still above the 10% deregulation threshold. Electric Ireland recorded a net gain in customers from April through to the rest of 2011, the first net gain by Electric Ireland since the domestic market was opened to competition. In gas, overall switching activity was high with an average of under 9,500 switches per month throughout the year. However, the net level of monthly switching declined over the year. Bord Gáis Energy has lost on average 6,250 customers on average thought the year. The switching rate for residential and commercial has remained high at over 17% for both market sectors.


44

5.0 Pricing

5.1 Introduction

This section provides an overview of electricity prices in Ireland in 2011. It includes a review of wholesale market price trends and Eurostat14 data.

5.2 Electricity Pricing

Electricity retail prices are based on relevant costs incurred by a supplier in serving its customer base for the relevant period; Networks (transmission & distribution), Supply, Public Service Obligation levy and Wholesale costs (energy, capacity & market operator costs). The biggest cost driver in electricity prices is generation and Ireland’s fuel mix for electricity generation has one of the highest levels of fossil-fuel reliance within the EU. The majority of the total cost of generation relates to energy and the price of fossil fuels, which is externally determined and for the most part has risen considerably over the period between 1998 and 2008 and while fuel prices were lower during 2009 and the first half of 2010, they rose again towards the end of 2010. Ireland’s network unit charges will also tend to be higher than most other European countries due to the dispersed nature of its population, which is more costly to serve. There has also been significant investment in the networks over the last decade that provided essential upgrades to improve security and reliability of the network as well as additional infrastructure to support the renewable targets and regional enterprise development.

5.2.1 Factors Affecting Electricity Prices in 2011

The most significant factor affecting electricity prices in Ireland is global energy prices. This has particular effect in Ireland due to Ireland’s high dependency on imported fossil fuels for electricity generation (81% in 200915). The wholesale price of gas rose considerably in 2011, which resulted in higher electricity prices as Ireland relies on gas for 55% of its electricity generation15. The fuel mix for generation has a key bearing on the variation in the price of electricity in different countries. As stated above Ireland has a high dependence on Fossil fuels. Fossil fuels are traded on international markets and during periods of high volatility, there is a knock-on impact on electricity prices. Economic uncertainty surrounding sovereign debt in Europe caused the euro to fall significantly against the dollar, from over $1.45 in July to $1.29 at the end of December 201116. Consequently, the euro price of gas increased.

14

S2 2011 data includes provisional values in gas for Luxembourg, Netherlands and Turkey, which as a result means that the Euro Area average is a provision figure. The same applies in Electricity where the figures for Italy, Norway and Turkey are provisional. 15

SEAI Electricity and Gas Prices in Ireland - 1st Semester 2011

16 Irish Central Bank Exchange Rates


45

5.2.2 Suppliers Electricity Prices

The Electricity retail market was fully deregulated on the 4th April 2011 as a result of Electric Ireland’s domestic market share falling below the 60% market share threshold set out in the “Review of the Regulatory Framework for the Retail Electricity Market: Roadmap to Deregulation”17. All of the major electricity providers announced price rises for domestic customers in the summer of 2011. Bord Gáis Energy announced a 12% rise in electricity prices from the beginning of August. Airtricity announced a 12.3% increase in its standard tariff from the 1st September. Electric Ireland followed with a 12% increase coming into effect on the 1st October 2011.

5.2.3 LEU Credits

In 2009, the Large Energy User (LEU) Customer Credits were introduced as a result of Government concern about the impact of energy prices on LEUs competitiveness given their substantial contribution to employment. The Government took the decision to continue the LEU customer Credits in 2011/1218. The credits are structured in two parts; a kWh and a kVA element, and both elements were proportionally reduced to a lower level than the previous credits for 2010/11.

5.2.4 European Electricity Price Comparison

Table 5.1 shows Ireland’s residential electricity prices in 2011Bands DC and DD, which account for an 83% market share in Ireland, and were up by 9.7% and 17.3% from S1 to S2 in 2011. Ireland’s position relative to the Euro Area average increased across all bands from S1 to S2 in 2011. Figure 5.1 shows the trends in prices across the bands from S2 2007 to S2 2011.

Domestic Consumer Bands (All Taxes Included)

Cost - €/kWh

S1 2011

Cost - €/kWh

S2 2011

% Change Since S1

2011

Relative to Euro Area Average S1 2011

Relative to Euro Area Average S2 2011

Approx. Band

share of market

DA (<1,000 kWh) 0.4262 0.5294 24.2% 139.7% 171.9% 1.0%

DB (1,000 - 2,500 kWh) 0.2353 0.2503 6.4% 118.1% 122.8% 8.2%

DC (2,500 - 5,000 kWh) 0.1901 0.2086 9.7% 100.6% 108.3% 32.1%

DD (5,000 - 15,000 kWh) 0.1580 0.1853 17.3% 85.9% 97.9% 50.6%

DE (>15,000 kWh) 0.1318 0.1553 17.8% 74.7% 84.8% 8.2%

Table 5.1 Electricity Domestic Customer Prices relative to Euro Area Average

17

Roadmap to Deregulation CER 10/058 18

LEU Customer Credits to apply from the 1st October 2011 - CER 11/814.

http://www.cer.ie/en/electricity-retail-market-decision-documents.aspx?article=1939cfb3-d698-4863-ba31-89f2f88c5c13


46

Figure 5.1 Irish Domestic Electricity Prices relative to the Euro Area (inc all Taxes)

There was an increase in the average price of business electricity in Ireland across all bands from S1 to S2 in 2011, ranging from 7.5% in band IA to 11-12% in bands IB-IE. The ex-VAT prices for businesses in Ireland remain above the Euro Area average from small customers (band IA and band IB) and medium customers (band IC) as shown in table 5.2. Medium consumers (band IC) are 10.9% above the Euro Area average. Large consumers (band IE) are 10.6% below the average while small consumers (band IA) are 4% above the average. Figure 5.2 shows the trends in prices across the industrial bands from S2 2007 to S2 2011.


47

Industrial Consumer Bands (VAT Excluded)

Cost - €/kWh

S1 2011

Cost - €/kWh

S2 2011

% Change Since S1

2011

Relative to Euro

Area Average S1 2011

Relative to Euro


Approx. Band

share of market

IA (<20 MWh) 0.1845 0.1983 7.5% 97.8% 104.0% 5.0%

IB (20 - 500 MWh) 0.1342 0.1506 12.2% 98.0% 108.6% 31.9%

IC (500 - 2,000 MWh) 0.1155 0.1294 12.0% 99.8% 110.9% 16.6%

ID (2,000 - 20,000 MWh) 0.0873 0.0977 11.9% 86.4% 95.4% 30.3%

IE (20,000 - 70,000 MWh) 0.0769 0.0856 11.3% 83.9% 89.4% 13.1%

IF (70,000 - 150,000 MWh) 0.0687 n/a n/a n/a n/a 3.2%19

Table 5.2 Irish Industrial Electricity Prices relative to the Euro Area (Excl VAT)

Figure 5.2 Irish Industrial Electricity Prices relative to the Euro Area (Excl VAT)

5.3 Gas Pricing

This section provides an overview of changes in final retail tariffs in 2011 as well as describing other significant events relating to tariffs during 2011. The price of gas in Ireland tracks the UK National Balancing Point (NBP), which is a virtual trading point. The gas price is generally higher in Ireland due to the transportation costs associated with shipping the gas to Ireland.

19

Data is not published for Band IF for confidentiality reasons.


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5.3.1 Suppliers Standard Domestic Tariffs

Increases in the wholesale price of gas led to all suppliers announcing price increases for domestic customers in 2011. In July 2011, the CER approved a 22% increase in Bord Gáis Energy Energy’s regulated gas prices. Airtricity followed this by announcing a 22% rise in prices, which took effect on the 1st September. Flogas announced a 40% increase in their standing charge, which took effect from 1st August. Electric Ireland also introduced price rises with their gas prices rising by 21.2% from 1st October.

5.3.2 Carbon Tax

A carbon tax was introduced by the government on 1st May 2010. This was initially set at €3.07 / MWh; this has since increased to €4.10 / MWh from the 1st May 2011.

5.3.3 European Gas Price Comparison

Table 5.3 shows Ireland’s gas prices for domestic customers in 2011. Irish domestic gas prices increased by 21.4% in band D2 from prices in S1 2011, this band constitutes have a 95% market share. Band D1 and D3 also saw increases in prices from S1 2011. Ireland’s domestic gas prices continue to be below Euro Area average although this shifted in all consumer bands in 2011 ranging from 5.3% in band D3 to 6.4% in band D1. Band D2 had an increase of 3.9% relative to the Euro Area Average. Figure 5.3 shows the trends in prices across the domestic bands from S2 2007 to S2 2011.

Domestic Consumer Bands (All Taxes Included)

Cost - €/GJ S1

2011

Cost - €/GJ S2

2011

% Change Since S1

2011

Relative to Euro


Relative to Euro


Approx. Band

share of market

D1 (< 20 GJ) 15.5200 19.9600 28.6% 59.3% 65.7% 2.6%

D2 (20 - 200 GJ) 14.1400 17.1700 21.4% 81.4% 85.3% 95.2%

D3 (>200 GJ) 13.4400 15.9200 18.5% 81.7% 87.0% 2.2%

Table 5.3 Irish Domestic Gas Prices relative to the Euro Area (inc all Taxes)


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Figure 5.3 Irish Domestic Gas Prices relative to the Euro Area (inc all Taxes)

Table 5.4 shows Ireland’s industrial gas costs compared with S2 2011. Small to medium business in band I1 and I2 showed increases of 32% and 23.3% respectively in 2011. Band I4 had a decrease of 5.8% compared with the previous semester, while band I3 had a 3.3% increase in the ex-VAT price of gas across 2011. Relative to the Euro Area average, Band I1 and I2 experienced rises of 17.9% and 11.3% respectively. Band I3 had a decrease of 4.8% relative to the Euro Area average while band I4 has a decrease of 13%. Figure 5.4 shows the trends in prices across the industrial gas bands from S2 2007 to S2 2011.

Industrial Consumer Bands (VAT Excluded)

Cost - €/GJ S1

2011

Cost - €/GJ S2

2011

% Change Since S1

2011

Relative to Euro


Relative to Euro


Approx. Band

share of market

I1 (<1,000 GJ) 10.61 14.00 32.0% 80.6% 98.5% 10.6%

I2 (1,000 - 10,000 GJ) 10.32 12.72 23.3% 83.8% 95.1% 20.1%

I3 (10,000 - 100,000 GJ) 10.61 10.96 3.3% 103.0% 98.2% 27.8%

I4 (100,000 - 1,000,000 GJ) 7.95 7.49 -5.8% 93.0% 80.0% 41.6%

20 I5 (1,000,000 - 4,000,000

GJ) n/a

n/a

n/a

n/a

n/a

Table 5.4 Irish Industrial Gas Prices relative to the Euro Area (excl VAT)

20

Data is not published for Band I5 due to low sample size.


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Figure 5.4 Irish Industrial Gas Prices relative to the Euro Area (excl VAT)

5.4 Summary

Increasing wholesale gas prices played a significant part in increased electricity and gas prices in Ireland. Ireland relies on gas for 55%21 of electricity generated and as a result, increased wholesale gas prices will result in higher electricity prices. All the suppliers announced domestic price increases in 2011. Energy prices in Ireland increases in all bands except for gas band I4, which is the largest gas customers. Prices for gas domestic customers are below the Euro Area average for all bands. In electricity, domestic customers in band DD are 2.1% below the Euro Area average while Band DC is 7.9% above. These bands account for 83% of market share in the electricity domestic market. Gas industrial customers are below the Euro Area average in all bands while electricity ranges from 10.9% above in band IC to 10.6% below in band IE.

21

SEAI Electricity and Gas Prices in Ireland - 1st Semester 2011


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6.0 Customer Protection

6.1 Introduction

With the increase in competition and progressive deregulation of the retail markets, there has been a greater focus on customer protection initiatives. Greater customer choice has been a very positive development in the market over the last few years, but competition can bring complexity and therefore empowering customers with the information they need to make the right choice in energy product has been a priority of the CER in 2011. The CER has strengthened the requirements of the suppliers codes of proactive to ensure fair and robust customer processes are in place. The challenging economic environment in 2011 was also has also been a driver for the rollout of Pay As You Go Meters, which give customers greater control when managing their energy bills, particularly where they have accumulated arrears.

6.2 Codes of Practice

In August 2011, the CER consulted on a revised Handbook for Suppliers of Electricity and Natural Gas, which set out proposed guidelines that suppliers will have to follow when drafting their Codes of Practice and Customer Charters. The guidelines included changes required under the 3rd Package, and as a result of market deregulation, and greater competition in the natural gas and electricity markets. The CER has reviewed the responses to the consultation and is due to publish the decision paper in June 2012. The key changes proposed in the consultation were as follows:

i. Customer Charter – proposed introduction of a €35 minimum charter payment amount.

ii. Code of Practice on Marketing & Sign Up - proposed introduction of a requirement to publish all household customer tariffs, to present tariffs in a set format, to follow set steps when signing a customer up and to provide customers with a doorstep checklist using standard text.

iii. Code of Practice on Customer Billing - proposed introduction of a requirement to notify customers of tariff changes 30 days in advance of the change taking place and to include the process for closure of accounts.

iv. Code of Practice on Disconnection - proposed introduction of the inclusion of a requirement to issue notice of disconnection to properties with no registered account holder in advance of disconnection.

v. Code of Practice on Complaint Handling - proposed introduction of a requirement to have a minimum of one escalation point in the process for


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customers, to issue a decision on complaints within 2 months and to issue decisions to customers in writing.

vi. Code of Practice on Vulnerable Customers - proposed introduction of the inclusion of a new definition of vulnerable customers.

vii. Code of Practice on Prepayment Metering & Budget Controllers - proposed consolidation of the existing requirements for natural gas prepayment meters and budget controllers into one code for all prepayment technologies.

viii. Terms and Conditions of Supply to Household Customers – proposal on a set of requirements for supplier terms and conditions has been included in the guidelines setting out information that must be included and providing guidance on how the terms and conditions will be assessed in advance of CER approval.

6.3 Customer Complaints

The CER notes there was a significant increase in the number of customers contacting its Energy Customers Team in 2011. These customers made contact seeking general information and also to raise complaints against their supplier or network operator. The majority were referred back to their supplier or network operators’ complaints process as they had not completed all of the necessary steps in the complaints handling process. A separate report on the work of the Energy Customers Team will be published later in 2012, which will include complaints statistics.

6.4 Price Comparison Websites

Prices comparison websites are a useful tool to help customers find the most competitive products. In 2011, nearly half of the consumers questioned in a CER survey shared this opinion by agreeing that web based price comparison services would be beneficial when making a switching decision. This was against a backdrop of relatively straightforward pricing by suppliers – a percentage reduction on regulated Electric Ireland and Bord Gáis Energy tariffs. With product diversification in a deregulated market, greater competition amongst supplier’s drives further tariff and product innovation, the value of price comparison services to consumers can only become greater. In recognition of the role that web based price comparison services can play in aiding consumers; the CER introduced an accreditation framework for such services in August 2011. The accreditation framework, akin to that in the UK, provides consumers with price comparison services that they can be confident in while driving competition between service providers (which should deliver better


53

service to the customer). Under the accreditation framework, a website providing an energy price comparison service is only accredited by the CER if it meets defined standards for accuracy, transparency, and reliability. An accredited site will also be audited at least annually by the CER to ensure that it continues to provide a high standard of service. The first accreditation of a price comparison website was in March 2012. The website, www.bonkers.ie is an online comparison and switching service which helps customers to compare a range of services including gas & electricity prices.

6.5 Supply Licence Review

In October 2011, the CER published a consultation proposing modifications to the electricity and gas supply licences. This consultation proposed some amendments and some new conditions based on recent legislative provisions, changes to the regulatory framework and market developments. In relation to consumer protection, the key change was a new licence condition was introduced in the electricity supply licence to formally bind suppliers to the CER’s Code of Practice Guidelines. This was already in the recently updated gas supply licence. As discussed in section 6.2, the Codes of Practice guidelines specify the minimum level of customer service that suppliers must meet in key areas of customer engagement. Further to consultation, the modified supply licences came into force on 26th March 2012.

6.6 Pay As You Go Meters

The CER has been working with industry to facilitate the rollout of electricity and gas PAYG meters free of charge for those customers who are experiencing financial hardship. This requires all domestic suppliers to put in place the necessary processes such that they can provide PAYG meters to their customers. In the case of the gas market, a full PAYG solution has been operational since Q4 2008. Until 2011, Bord Gáis Energy was the only supplier that was operating in this space. In Q2 2011 the CER requested that all domestic suppliers who are not yet providing PAYG meters to make the necessary arrangements with BGN to enter this market as soon as feasibly possible. Airtricity now offers PAYG for gas with other suppliers expected to follow suit shortly. In the case of the electricity market, historically, ‘budget controller’ units have been used by domestic customers. Budget controllers, or token meters, are not meters of record but a device that is installed in series with the customer’s meter. However, as this technology is dated and approaching obsolescence, the CER approved a proposal from ESB Networks to procure a new PAYG solution for the electricity market to be installed for winter 2011. The CER approved that the cost of 100,000 of these meters would be socialised via the networks charges so that they can be provided by suppliers, free of charge to the customer, under the financial


54

hardship provision. The culmination of this project took place at the end of October 2011 with the go-live of the new electricity PAYG metering solution. Electric Ireland and Airtricity are currently providing PAYG meters to customers in financial hardship. The CER expects that all domestic electricity suppliers will be in this position in 2012. There were 21,181 PAYG gas meters installed in 2011, bringing the total installed base to 54,450, which represents 8.8% of the total residential gas population. The percentage of meters installed under the financial hardship provision was 96% in 2011, and this trend is reflective of the reports that customers are increasingly experiencing difficulty-managing payments. By the end of 2011 there were approximately 1,089 PAYG electricity meters in installed, with a further installed base of approximately 24,000 token meters. The complete set of PAYG data for 2011 was published in CER12/01422. As discussed in section 1.2, this paper brings all market reporting into line up to the end of 2011; therefore, this section provides only a high-level overview of the annual trends. Another development in the prepayment space was the launch of a prepayment service by a new supplier Pre Pay Power. Pre Pay Power offers a slightly different model of prepayment by providing the PAYG unit directly to the customer, so that it acts as a budget controller in series with the customer’s meter. While this deviates from the model of ESBN delivered PAYG, all suppliers are bound to the conditions of the codes of practice regarding prepayment and customer interfaces.

6.7 Summary

With the increase in competition and progressive deregulation of the retail markets, 2011 saw the introduction of a number of customer protection initiatives. These included the proposals on strengthening of the codes of practice to incorporate additional provisions including; minimum charter payments, publication of tariffs, mandatory notice periods for tariff changes and escalation points on complaint handling. The final provisions will be incorporated into the revised supply licences, so that compliance with the codes of practice becomes an explicit condition of both the gas and electricity licences. 2011 saw a focus on greater information for customers with the launch of the price comparison website accreditation framework. Finally the extended rollout of PAYG meters in 2011 meant that more customers were able to benefit from the flexibility that this payment method allows. The focus to date is on the delivery of these meters to customers in financial hardship, for whom the cost of the meter is socialised.

22

Electricity & Gas Customer Disconnections Report January – December 2011


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7.0 Customer Debt & Disconnection

7.1 Introduction

The economic backdrop to the deregulation of the energy markets has seen dramatic changes in the financial circumstances of energy consumers. This more constrained economic environment has prompted consumers to shop around for a better deal, benefitting from the competitive market. However for some customers it has led to mounting debt. In 2010, the CER identified a significant increase in the level of supply disconnections taking place in both the gas and electricity markets. In parallel, suppliers and customer organisations indicated to the CER that customers were increasingly changing supplier in order to avoid repaying their debt or a pending disconnection for non payment with their current supplier. This resulted in CER introducing a debt flagging process to notify a gaining supplier when a customer that was switching to them had an existing debt. As set out in Section 1.2, the complete set of supply disconnection and debt flagging data for 2011 was published in CER12/01423. As discussed this paper brings all market reporting into line up to the end of 2011, therefore this section provides only a high level overview of the annual trends.

7.2 Debt Flagging

Debt flagging has been operational in the electricity and gas market since the 17th October 2011. As part of its market monitoring obligations, the CER monitors the use of this flagging facility by both losing and gaining suppliers on an ongoing basis to ensure that the process is being applied correctly. The data provided by ESB Networks showed that from October to December 2011 there were between 1% and 3% of all change of supplier requests had valid debt flags. As is the case for the electricity market, a relatively low number of debt flags were raised as a percentage of total gas switches requested during this period, falling from 1.2% in October to just under 0.6% in December 2011. As per the requirements of the CER Debt Flagging Industry Code in these cases, the customer would be advised to make contact with their current supplier to discuss the status of their account and how this can be addressed so that the customer can proceed with changing supplier as soon as possible.

23

Electricity & Gas Customer Disconnections Report January – December 2011 CER12/014


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7.3 Supply Disconnections

In the gas and electricity markets, a customer is connected to the distribution network by ESBN or BGN. The customer has a contract with a supplier and is usually billed in arrears on a monthly / bimonthly basis. If a customer falls into arrears and defaults on that contract the supplier initiates credit control proceedings, issuing reminders to the customer. At the end of that process, if the issue is unresolved, the supplier may take the decision to disconnect the customer and issue an instruction to relevant distribution company to complete the disconnection on the supplier’s behalf.

7.3.1 Electricity Disconnections

2011 saw a 3% increase in the total number of disconnections on 2010, while the annual profile followed a similar trend to 2010, peaking later in the year and slowing in the last quarter. Tracking historical trends in disconnections, table 4.1 below shows the number of disconnections per month from January 2007 up to the end of December 2011 for non-payment of account.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

2007 857 793 759 782 1,157 1,038 1,113 1,178 976 969 1,032 268 10,921

2008 985 954 700 1,047 1,055 1,058 1,212 906 839 808 870 555 10,986

2009 820 823 569 781 708 826 992 858 888 813 998 633 9,709

2010 1,118 1,363 1,447 1,149 1,492 1,756 2,353 2,118 1,771 897 1,045 170 16,679

2011 1,160 977 1,161 1,409 1,459 1,535 2,002 2,064 2,075 1,812 1,489 651 17,236

Table 7.1 – Total Electricity Disconnections 2007 to 2011

7.3.2 Gas Disconnections

The source data range for gas has changed from the last report now only includes disconnect meter (DM) and street isolation data that were related to non payment of account. Table 7.2 sets out the number of disconnections, which have been carried out by BGN on behalf of suppliers since November 2010 to the end of 2011. In 2011, the levels of disconnections rose continuously until August, where they peaked, and subsequently declined until the end of the year.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

2010

187 61 248

2011 79 242 275 278 504 515 533 792 494 428 302 118 4,560

Table 7.2 – Total Gas Disconnections November 2010 to Present


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7.3.3 Estimation of Vacant Premises

The data on disconnections for non payment of account, provided by the networks companies, does not identify if a premise, whether domestic or non domestic, is actually vacant. Industry participants have suggested that this could account for a significant share of the total number of disconnections. However based on available data, there is no accurate means of validating this assertion with certainty. Therefore as a means of proxy, the networks companies have provided data on the number of disconnected premises that were reconnected, within 2 weeks or more of disconnection, to the same supplier or that has switched to a different supplier. This data covers the months of October and November 2011 and showed that for electricity approximately 31% of domestic and 64-62% of non domestic premises remained disconnected after 2 weeks or more of disconnection for non payment of account. If this figure was considered a reasonable proxy of vacant premises within the disconnection data for all of 2011, this would mean the total disconnections for occupied premises would be approximately 10,000 domestic customers from the total of 14,570 and just under 900 non-domestic customers out of the total 3,317. A similar exercise in the gas market suggests that approximately 50% of domestic disconnections have not been reconnected over this period. For business customers this equivalent figure is over 70%. These figures are much higher than the electricity estimate, indication a potential over estimate requiring further investigation.

7.4 Summary

The financial difficulties being faced by consumers is evident in the levels of customers in arrears and those who have had their supply disconnected for reason of non payment. In 2011 the CER continued to monitor the trend of the level of disconnection which saw a further increase on 2010 in electricity. The escalation of customer arrears and bad debt in the industry also prompted the introduction of a debt flagging process. This is intended to provide a marker to gaining suppliers to notify them if a customer is trying to switch and leave an existing debt. While the customer is not prevented from switching, the debt flag is a deterrent to debt hopping, which perpetuates the debt situation for both customers and suppliers.


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8.0 Conclusions

8.1 Introduction

2011 was a significant year in the development of retail competition with the full deregulation of the electricity market in April 2011 and the deregulation of all gas business markets on 1st October 2011. The deregulation decision saw Electric Ireland promote a range of single and dual fuel offers, taking a position in the gas market. By the end of 2011, Electric Ireland had a 57% market share (MWhs) in electricity and had captured 1.7% of the gas market. The domestic market in gas is the only remaining retail market sector that is still subject to tariff regulation and as such reported on via the quarterly competition review. Bord Gáis Energy’s domestic market share was 73% for customer numbers and 78% for consumption at the end of 2011. Average annual customer churn was approximately 15% for electricity, this dropped from approximately 30,000 switches per month in quarters 1-3 to under 20,000 in quarter 4. In the gas market, customer switching was also very strong with an average annual with rate of 9,500 per month resulting in a switching rate of 17%, although the net monthly switching declined towards the end of the year. Energy prices continued to increase across all bands in both electricity and gas with exception of the largest gas industrial customers. Increased Wholesale gas prices and the weak Euro contributed to this. Domestic gas prices in all bands remain below the Euro Area average, while domestic electricity prices in Band DD are below and above in band DC. These two bands have a 83% share of consumption. In terms of customer protection, 2011 saw an extended rollout of PAYG meters. The focus to date is on the delivery of these meters to customers in financial hardship, for whom the cost of the meter is socialised. Additionally, the gas and electricity supply licences now include a provision making compliance with the codes of practice an explicit condition of the licence. The increased financial difficulties being faced by consumers is evident in the levels of customers in arrears and those who have had their supply disconnected for reason of non-payment. In 2011, disconnections increased on levels in 2010 in electricity. The increased financial difficulties lead to the introduction of a debt flagging process on October 2011. This process is intended to prevent debt hopping by customers, which escalates the debt issue for customers and suppliers.

8.2 Next Steps

The CER will continue to monitor the retail markets in 2012. The next report covering market data for Q1 2012; market shares, switching, pricing, disconnections, debt flagging and PAYG meters will be published at the end of Q2 2012.


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Reporting Period Publication Date

Q1 2012 End Q2 2012

Q2 2012 End Q3 2012

Q3 2012 End Q4 2012

Q4 2012 End Q1 2013

In parallel, the CER is also consulting on a new framework for market monitoring which will expand the range of metrics currently reviewed, sourcing information from the Suppliers as well as the DSOs to give a more complete picture of the retail markets as required by the 3rd Package. Once the metrics have been fully defined, the CER will set out the plan for transitioning to the new reporting template. In conjunction with the market monitoring activities the general consumer protection measures will ensure that consumers benefit through the efficient functioning of the retails markets and in doing such, fulfil the key retail aims of the 3rd Package.


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Appendix A – Electricity Market Data Tables Table 1 Distribution Customer Numbers Groups Type 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DG1 Urban Domestic

805,136 831,836 857,336 883,947 913,936 950,813 993,811 1,054,865 1,262,034 1,332,956 1,367,757 1,382,608 1,388,249 1,388,130

DG2 Rural Domestic

564,646 582,178 603,270 626,148 650,065 678,533 710,761 731,248 608,542 610,687 621,699 628,950 631,716 634,676

DG3+DG4 Public Light, Misc

3,683 4,063 4,492 4,883 5,322 5,681 6,175 6,662 6,487 9,147 10,004 10,437 10,908 11,194

DG5 LV Non MD 147,219 150,889 154,785 159,457 163,052 165,987 171,999 175,993 180,880 184,855 189,544 190,585 191,505 190,749

DG6 LV MD 6,782 7,269 8,019 8,687 8,472 8,289 8,682 9,903 11,098 12,221 13,226 13,416 13,303 13,175

DG7 MV 831 863 894 934 949 999 1,056 1,203 1,271 1,349 1,413 1,444 1,468 1,491

DG8+DG9 38kV 38 38 39 39 39 38 37 59 66 70 77 75 77 86

DG10 110kV Network

0 0 0 0 1 1 1 1 2 1 4 6 6 6

DG1-2 Total Domestic

1,369,782 1,414,014 1,460,606 1,510,095 1,564,001 1,629,346 1,704,572 1,786,113 1,870,576 1,943,643 1,989,456 2,011,558 2,019,965 2,022,806

DG3-6 Total LV Non Dom

157,684 162,221 167,296 173,027 176,846 179,957 186,856 192,558 198,465 206,223 212,774 214,438 215,716 215,118

DG7-10 Total MV & HV

869 901 933 973 989 1,038 1,094 1,263 1,339 1,420 1,494 1,525 1,551 1,583

Total 1,528,335 1,577,136 1,628,835 1,684,095 1,741,836 1,810,341 1,892,522 1,979,934 2,070,380 2,151,286 2,203,724 2,227,521 2,237,232 2,239,507

Source: ESB Networks


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Table 2 Distribution Annual Sales GWh (at customer meter point)

Group Type 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DG1 Urban Domestic

3,249.6 3,430.1 3,611.3 3,836.1 4,053.4 4,182.2 4,302.0 4,426.0 4,602.6 5,432.2 5,711.7 6,044.9 5,930.1 6,048.7 5,870.8

DG2 Rural Domestic

2,372.9 2,482.8 2,620.6 2,790.3 2,984.7 3,142.4 3,264.2 3,405.8 3,515.0 3,084.3 2,992.4 3,090.9 3,043.6 3,119.5 3,073.1


152.5 155.4 159.2 167.3 174.6 166.8 189.4 198.8 217.0 222.9 236.7 251.0 258.8 264.1 265.6

DG5 LV Non MD 2,630.2 2,755.6 2,950.4 3,138.2 3,242.7 3,394.9 3,623.2 3,840.3 4,043.4 4,212.0 4,219.4 4,275.7 3,995.4 3,940.1 3,794.1

DG6 LV Max Demand

2,433.5 2,621.5 2,828.3 3,039.5 3,267.5 3,292.4 3,313.7 3,352.0 3,546.8 3,840.7 4,041.7 4,168.3 3,991.6 3,992.9 3,898.8

DG7 MV 3,412.4 3,625.8 3,833.8 4,103.2 4,324.7 4,384.9 4,543.4 4,707.8 4,924.9 5,161.0 5,310.4 5,280.7 4,913.5 4,895.1 4,897.6

DG8+DG9 38kV 700.8 733.9 779.9 737.1 778.9 800.3 807.9 794.0 810.2 861.3 852.7 839.0 739.0 669.4 648.1

DG10 110kV Network

0.0 0.0 0.0 0.0 0.0 8.2 36.7 75.4 87.6 88.2 91.6 92.9 83.0 133.1 131.8

DG1-2 Total Domestic

5,622.5 5,912.9 6,231.9 6,626.3 7,038.1 7,324.6 7,566.2 7,831.8 8,117.6 8,516.5 8,704.0 9,135.7 8,973.7 9,168.2 8,943.9

DG3-6 Total LV Non Dom

5,216.2 5,532.5 5,937.9 6,344.9 6,684.8 6,854.1 7,126.2 7,391.1 7,807.2 8,275.6 8,497.9 8,694.9 8,245.9 8,197.0 7,958.5

DG7-10 Total MV & HV

4,113.2 4,359.7 4,613.7 4,840.3 5,103.6 5,193.4 5,388.0 5,577.2 5,822.7 6,110.5 6,254.7 6,212.5 5,735.6 5,697.6 5,677.5

Total 14,952.0 15,805.0 16,783.6 17,811.5 18,826.6 19,372.0 20,080.3 20,800.1 21,747.6 22,902.6 23,456.6 24,043.2 22,955.1 23,062.8 22,579.9



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Table 3 Distribution Annual Consumption – MWh/Customer (at customer meter point)

Group Type 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DG1 Urban Domestic 4.18 4.26 4.34 4.47 4.59 4.58 4.52 4.45 4.36 4.30 4.28 4.42 4.29 4.36 4.23

DG2 Rural Domestic 4.31 4.40 4.50 4.63 4.77 4.83 4.81 4.79 4.81 5.07 4.90 4.97 4.84 4.94 4.84


46.14 42.20 39.18 37.23 35.75 31.33 33.33 32.19 32.57 34.36 25.88 25.09 24.80 24.21 23.72

DG5 LV Non MD

18.26 18.72 19.55 20.27 20.34 20.82 21.83 22.33 22.97 23.29 22.83 22.56 20.96 20.57 19.89

DG6 LV MD 389.42 386.54 389.09 379.04 376.14 388.63 399.77 386.09 358.16 346.07 330.72 315.16 297.52 300.15 295.93

DG7 MV 4,408.82 4,363.19 4,442.47 4,589.71 4,630.32 4,620.55 4,547.91 4,458.17 4,093.83 4,060.59 3,936.58 3,737.21 3,402.72 3,334.52 3,284.80

DG8+DG9 38kV 20,023.34 19,312.58 20,523.53 18,899.49 19,971.22 20,519.93 21,261.63 21,459.46 13,732.86 13,049.63 12,181.09 10,895.62 9,853.38 8,694.08 7,536.36

DG10 110kV Network

8,206.93 36,653.00 75,390.54 87,617.00 44,115.20 91,609.26 23,213.06 13,837.98 22,183.28 21,958.72

Total 10.08 10.34 10.64 10.94 11.18 11.12 11.09 10.99 10.98 11.06 10.90 10.91 10.31 10.31 10.08



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Table 4 Distribution Customer Number Forecast 2011 – 2018

Source ESB Networks

Group Type 2012 2013 2014 2015 2016 2017 2018

DG1 24Hr 1,209,913 1,213,690 1,217,810 1,221,930 1,226,065 1,230,213 1,234,375 DG1 Dual Tariff 182,357 182,927 183,548 184,169 184,792 185,417 186,044 DG1 Urban

Domestic 1,392,271 1,396,617 1,401,358 1,406,099 1,410,856 1,415,630 1,420,419 DG2 24Hr 587,069 588,902 590,901 592,900 594,906 596,919 598,938 DG2 Dual Tariff 49,500 49,655 49,823 49,992 50,161 50,331 50,501 DG2 Rural

Domestic 636,569 638,556 640,724 642,892 645,067 647,249 649,439 DG3+DG4 Public Light,

Misc 11,194 11,306 11,476 11,648 11,881 12,118 12,361 DG5 24Hr 131,798 133,116 135,113 137,139 139,882 142,680 145,533 DG5 Dual Tariff 58,951 59,541 60,434 61,340 62,567 63,818 65,095 DG5 LV Non MD 190,749 192,656 195,546 198,480 202,449 206,498 210,628 DG6 LV MD 13,175 13,307 13,506 13,709 13,983 14,263 14,548 DG7 MV 1,516 1,547 1,585 1,633 1,682 1,732 1,784 DG8 38kV Looped 53 53 53 53 53 53 53 DG9 38kV Tailed 33 33 33 33 33 33 33 DG10 110kV Network 6 6 6 6 6 6 6 DG1-2 Total Domestic 2,028,840 2,035,173 2,042,082 2,048,991 2,055,923 2,062,879 2,069,858 DG3-6 Total LV Non

Dom 215,118 217,269 220,528 223,836 228,313 232,879 237,537 DG7-10 Total MV & HV 1,608 1,639 1,677 1,725 1,774 1,824 1,876 Total 2,245,566 2,254,081 2,264,287 2,274,552 2,286,010 2,297,582 2,309,271


64

Table 5 Distribution Annual Growth in Consumption (1998 - 2011)

Group Type 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DG1 Urban Domestic 2.0% 1.9% 3.1% 2.5% -0.2% -1.1% -1.6% -2.0% -1.4% -0.4% 3.1% -3.0% 1.6% -2.9%

DG2 Rural Domestic 2.1% 2.4% 2.8% 3.1% 1.4% -0.5% -0.4% 0.3% 5.4% -3.3% 1.5% -2.7% 2.0% -1.9%


-8.5% -7.1% -5.0% -4.0% -

12.4% 6.4% -3.4% 1.2% 5.5% -

24.7% -3.1% -1.1% -2.4% -2.0% DG5 LV Non MD

2.5% 4.5% 3.7% 0.3% 2.4% 4.8% 2.3% 2.9% 1.4% -2.0% -1.2% -7.1% -1.9% -3.3% DG6 LV MD

-0.7% 0.7% -2.6% -0.8% 3.3% 2.9% -3.4% -7.2% -3.4% -4.4% -4.7% -5.6% 0.9% -1.4% DG7 MV

-1.0% 1.8% 3.3% 0.9% -0.2% -1.6% -2.0% -8.2% -0.8% -3.1% -5.1% -9.0% -2.0% -1.5% DG8+DG9 38kV

-3.5% 6.3% -7.9% 5.7% 2.7% 3.6% 0.9% -

36.0% -5.0% -6.7% -

10.6% -9.6% -

11.8% -13.3% DG10 110kV Network

346.6

% 105.7

% 16.2% -

49.6% 107.7

% -

74.7% -

40.4% 60.3% -1.0%

Total 2.6% 2.9% 2.8% 2.2% -0.5% -0.3% -0.9% -0.1% 0.7% -1.4% 0.1% -5.5% 0.0% -2.2%



65

Table 6 Distribution Consumption Forecast 2010 – 2015 GWh Group Type 2012 2013 2014 2015 2016 2017 2018

DG1 24Hr 4,521 4,523 4,489 4,455 4,421 4,388 4,355 DG1 Dual Tariff - Day 537 537 533 529 525 521 517 DG1 Dual Tariff - Night 611 611 607 602 597 593 588 DG1 Urban Domestic 5,669 5,671 5,628 5,586 5,544 5,502 5,460 DG2 24Hr 2,367 2,368 2,350 2,332 2,315 2,297 2,280 DG2 Dual Tariff - Day 333 334 331 329 326 324 321 DG2 Dual Tariff - Night 267 267 265 263 261 259 257 DG2 Rural Domestic 2,967 2,969 2,946 2,924 2,902 2,880 2,858 DG3+DG4 Public Light, Misc 261 262 264 267 272 276 281 DG5 24Hr 1,591 1,597 1,614 1,631 1,659 1,687 1,716 DG5 Dual Tariff - Day 1,355 1,360 1,375 1,389 1,413 1,437 1,461 DG5 Dual Tariff - Night 777 780 789 797 811 824 838 DG5 LV Non MD 3,723 3,737 3,777 3,817 3,882 3,948 4,016 Day 2,752 2,763 2,792 2,822 2,870 2,919 2,968 Night 1,074 1,078 1,089 1,101 1,120 1,139 1,158 DG6 LV MD 3,825 3,841 3,881 3,922 3,989 4,057 4,126 Day 3,295 3,325 3,370 3,423 3,476 3,531 3,586 Night 1,620 1,635 1,657 1,683 1,710 1,736 1,764 DG7 MV 4,915 4,960 5,027 5,106 5,186 5,267 5,350 Day 377 380 385 391 397 404 410 Night 209 211 214 217 220 224 227 DG8 38kV Looped 585 591 599 608 618 627 637 Day 42 42 43 43 44 45 46 Night 23 23 24 24 24 25 25 DG9 38kV Tailed 65 66 67 68 69 70 71 Day 82 83 84 86 87 88 90 Night 50 50 51 52 53 53 54 DG10 110kV Network 132 133 135 137 140 142 144 DG1-2 Total Domestic 8,636 8,640 8,574 8,510 8,445 8,381 8,318 DG3-6 Total LV Non Dom 7,808 7,840 7,923 8,007 8,143 8,282 8,423 DG7-10 Total MV & HV 5,698 5,750 5,828 5,919 6,012 6,106 6,202 Total Distribution 22,143 22,229 22,325 22,435 22,600 22,769 22,943 Source: ESB Networks


66

Appendix B – Gas Market Data Tables Table 7: Historic Irish Gas Demand24

Unit 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Power GWh/y 28,775 28,845 25,630 29,775 34,688 37,758 36,007 39,338

I/C GWh/y 10,538 11,154 11,127 10,352 10,486 10,507 10,415 10,499

RES GWh/y 6,701 7,434 7,757 8,149 7,716 8,239 8,312 8,590

Own-use GWh/y 617 735 878 815 779 814 823 900

Total Irish GWh/y25 46,630 48,168 45,392 49,091 53,669 57,318 55,557 59,327

Table 8: Forecast Irish Gas Demand26

Unit 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

Power GWh/y 39,000 35,400 34,100 35,700 36,500 37,500 40,200 41,800 42,800 43,300

I/C GWh/y 10,300 10,400 10,800 11,200 11,600 11,800 12,000 12,100 12,300 12,500

RES GWh/y 8,000 8,000 7,900 7,900 7,900 7,900 7,900 7,900 7,900 7,900

Total Irish GWh/y27 58,200 54,600 53,600 55,300 56,500 57,700 60,600 62,500 63,700 64,400

24

Gas demand is summarised by “Gas Year”, i.e. the period from 1st October to the following 30th September 25

Own-use includes the gas consumed by the system, including fuel-gas for compressor stations & heaters 26

Information from the Joint Gas Capacity Statement 2011- CER 11145 27

Discrepancies between the total and the sum of Power, I/C and Res can be attributed to own use use.

electricity & gas retail markets annual report 2011 · 4 new licences were issued in 2011, all...

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