Would you like to pay German rates for your energy or Latvian rates? Even though you almost certainly haven’t a notion what it costs to heat and light a home in either country, you’d probably lean towards the latter on the basis that the former is a much higher cost economy.
And if you said Latvia you’d be bang on the money as Germany just happens to be the most expensive country in the EU for energy with people there typically paying at least €500 more each year than folk from Latvia.
Now you’d be forgiven for wondering why this is important given that it is probable you live in neither country?
But it is relevant to all of us as it emerged this week that 1.7 million Irish households can effectively make the choice between German and Latvian prices.
The strange thing is that the vast majority of people end up making the wrong choice and are, as a result, paying hundreds of euro more than they need to each year.
And we really can’t afford to make such simple mistakes. According to a report from price comparison and switching website bonkers.ie, the energy bills of Irish consumers are now typically more than €500 higher than much of the EU with the cost of domestic electricity alone about €350 more.
The figures taken from Eurostat, the EU statistical agency, put electricity prices in Ireland at the second highest in the EU and almost 30 per cent above average, behind only Germany.
Gas prices, meanwhile, are the fifth-highest and more than 15 per cent above the EU average with Irish households paying €183 a year more for gas.
Daragh Cassidy of bonkers.ie has noted – as he has done many, many times in the past – ways people can make savings.
The easiest way is to switch providers with those who do so able to get discounts for the first year that would put the prices they pay on a par with Latvia and below the EU average.
People can avail of these lower rates because providers in Ireland tend to offer substantial discounts to entice new customers with savings of 20 per cent or more on the standard rates typically available to loyal customers who stay put.
Despite the potential savings on the table, well in excess of one million Irish households do not shop around for the best value for money and the collective waste of money is staggering.
If one million households are paying €300 more than necessary each year and have not changed provider for the last five years then as a group they have overpaid to the tune of around €1.5 billion since 2019.
The inactivity in the switching space has been regularly documented by the Commission for the Regulation of Utilities (CRU) and in a recent report it suggested that the average customer can save €300-€400 if they switch or renegotiate with their current provider.
Based on its assessment, people active in the switching market over the past two years are likely to have saved €385 on gas, €663 on electricity or €1,261 on their dual fuel costs.
It is remarkable that so few people switch given how simple it is and given the complete absence of downsides.
Deciding to swap out one brand of cornflake or cola drink for another cheaper brand might come at a cost in terms of quality while someone switching broadband provider has to hope the quality of service from their new company will be on a par with what they are leaving behind.
And – as we have documented here before – when it comes to health insurance there are such a dizzying array of plans on the market that it can be hard for people to make a decision.
But none of the obstacles are there when it comes to gas and electricity. There is absolutely no difference in the quality of the product offered by company A or company B, no chance of disconnection and no complications to contend with.
It is also very, very simple to switch.
So, what do you need to do?
The first step is to call your existing provider and say you’re going to move to a different provider unless they offer you a discount comparable to what they might offer you if you were a new customer. If they offer you nothing for your loyalty, it is time to move.
If you are moving, the CRU advises people to use one of three accredited switching websites, bonkers.ie, powertoswitch.ie, or switcher.ie to compare offers and switch suppliers.
They will give you sense of what is on offer. Switching using one of the websites is also an option and can save you having to make calls to individual providers. You simply fill in some forms on the website and they do the rest.
If you decide you want to make the calls yourself, note the MPRN (meter point registration number) on your electricity bill or your GPRN (gas point registration number) on your gas bill and your billing details.
Take a meter reading. This is the measure your new supplier will start billing you from. Your old supplier will use it to close your account. Call the company you are currently with and tell them you’re leaving and then call your new company and tell them you want to sign up. And that should be that.
It is important to make sure you’re not still in contract with your current provider – contracts typically run for 12 months so if you haven’t made the switch in recent times then you should be grand. You should also ensure any arrears on your account have been cleared as this could hinder the switch.
And that’s it. Done. No call-outs. No-hassle savings. You’d be mad not to do it. And if just 10 people who read this article act on it the combined savings between now and this time next year will be €3,000. If 100 people act, they’ll save a total of €30,000.
And they will have the added smugness of knowing they are just that little bit more canny than their neighbours.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
