CER hints at deregulation of the retail gas market

Domination of domestic gas market could be over as early as next Spring

Eoin Clarke
by Eoin Clarke on 4th October, 2013

Bord Gáis Energy’s stronghold over the domestic gas market is increasingly being challenged, with the marked presence of other gas suppliers encouraging renewed competition for a place at the forefront of the sector.

The Commission for Energy Regulation (CER) previously set out a number of criteria which must be met for deregulation to occur and have recently released the fifth installment of their monthly competition reviews to assess progress.

The CER is keen for the deregulation of the energy market in Ireland, to promote competition and give consumers a wider choice of suppliers – and give them the opportunity to reduce their gas and electricity bills.

The regulator conducts monthly competition reviews investigating current market conditions and providing forecasts to determine precisely when the criteria will be met.

Which criteria have been fulfilled?

One of the points stated that two non-Bord Gáis Energy suppliers must hold a market share of over 10%.

With Electric Ireland and Airtricity staking their claim on 18% and 17.4% of the retail gas market respectively – and Flogas holding onto almost 5% – Bord Gáis Energy has satisfied this demand.*

A second point on the list of criteria stated that the switching rate should exceed 10% and once again Bord Gáis Energy has achieved this. Between September 2012 and August 2013, the average switching rate was around 18.5%.

The third measure has been partially fulfilled but is simultaneously impeding immediate deregulation.

The CER previously outlined that if Bord Gáis Energy were to rebrand, a 60% market share threshold would apply, which has been met.

However, a 55% threshold applies if the energy supplier opts not to rebrand and as the CER is yet to receive a decision on branding, the regulator has ruled that the criteria for deregulation have not been reached.

The CER has estimated that the 55% threshold is likely to be met in March 2014, after which deregulation could occur – providing the remaining criteria are fulfilled.

Regardless of a decision on branding, the CER will inform the market of the decision to deregulate the retail gas market at least one month before implementation.

*Source CER, figures correct in August 2013.