ESB price regulation may end soon

STATE-OWNED ESB could be about to compete on a level playing field with rivals who supply electricity to households under proposals put forward by the energy regulator.

Fellow State company Bord Gáis and private player Airtricity began supplying electricity to homes earlier this year, making them the first to take on the ESB, which was up to that point the sole supplier to the Republic’s 1.7 million homes.

The Commission for Energy Regulation (CER) currently sets the price that the ESB charges household customers.

This does not apply to its competitors, which have taken 17 per cent of the market between them since they began chasing domestic business in the spring, and who offer electricity at discounts to the ESB’s regulated price.

The CER is planning to stop regulating the ESB and allow it to set its own prices and compete alongside existing and/or future rivals in the domestic market, which it is already doing in the commercial market.

However, the regulator is only inviting consultations at this stage, and does not intend ending the current regime until the ESB’s dominant position in the household electricity market is diluted.

“In order to protect customers it is important that the regulation of ESB customer supply is not ended while there is still market power in the sector, so the commission will assess the level of competition in the various markets – businesses and households – before ending regulation,” it said in a statement.

“It proposes ESB market shares of 40 per cent to 50 per cent in the business sectors and 55 per cent to 60 per cent in the household sector as possible thresholds for removal of regulation.”

The CER estimated that so far this year, around 350,000 householders, accounting for 17 per cent of the market, have switched from the ESB to its competitors. It adds that if customers keep switching supplier at this rate, it should be possible to end its regulation in the “not-too-distant future”.

A consultation paper that the CER has produced deals with this issue, as well as what measures it will keep in place in the lead-up to full deregulation, and any monitoring it would carry out after it stops setting the ESB’s prices.