4. NATURAL GAS

Facilitating customer switching is essential to keep the gas market competitive. The CRU provides customers with information that is readily accessible on line to ensure that customers are well informed of their best available options. In the first quarter of 2018, there were 35 332 customers switching. This is equivalent to a 5.1% switching rate, and a 15.7% increase from the first quarter of 2017. The total number of customers switching in 2017 was 124 419 – a 9% increase from 2016. While Bord Gáis Energy remains the dominant player, it also saw the sharpest market share decline of 3.7% between 2017 and 2018, falling below 50% of the total market share for the first time. Energia absorbed the big portion of this market segment to increase its share by 1.7% (CRU, 2018a).

Prices and tariffs

There are no regulated prices in the wholesale and retail gas markets in Ireland, although the CRU is responsible for the regulation of gas network tariffs. In 2017, industry players paid USD 36.2 (United States dollars) per megawatt hour (MWh), which was the seventh highest among IEA member countries. Households paid USD 78.3/MWh, which was above the median in the comparison (Figure 4.4).

Figure 4.4 Natural gas prices in IEA countries, 2017

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Ireland’s industry pays a relatively high price for gas among IEA member countries; its household gas price is close to the median.

* Tax information unavailable for the United States.

Notes: For industry, data are unavailable for Australia, Greece, Mexico and Norway; for households, data are unavailable for Australia, Greece, Italy, Japan, Mexico and Norway.

Source: IEA (2018c), Energy Prices and Taxes 2018, Quarter 1, www.iea.org/statistics/.

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ENERGY SECURITY

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4. NATURAL GAS

Since the last IEA in-depth review (IDR) in 2012, the tax rate for industry gas price has increased substantially from 7% to 12%, while taxes for households have remained stable.

Gas prices have declined by 26% for industry and by 22% for households since 2014, when total gas consumption in Ireland started to pick up again. This trend of declining gas prices is shared with neighbouring countries (Figure 4.5).

The gas price is expected to retain its competitiveness against oil or liquefied petroleum gas in the commercial and industrial sectors up to 2021 due to the abundance of the gas supply and the expansion of gas networks (GNI, 2017).

Figure 4.5 Natural gas price trends in selected IEA countries, 2008-17

Ireland’s gas prices for industry and households have declined by 26% and 22% since 2014.

Source: IEA (2018c), Energy Prices and Taxes 2018, Quarter 1, www.iea.org/statistics/.

Irish balancing point

Ireland’s wholesale gas price includes a price set at the United Kingdom national balancing point (NBP) plus the transport cost of the interconnectors. All commercial contracts are linked to the NBP. The contracts remain linked to the NBP price in pounds sterling even in the case of a physical disruption at Moffat entry point. This fails to fully reflect the scarcity of gas supply in Ireland and is also affected by the EUR/GBP (British pound) currency fluctuations. The introduction of a new electronic trading platform – Energy Broking Ireland – in October 2017 marked a positive development against this background.

Most of the largest players in the Irish gas market have already started using Energy Broking Ireland, enhancing price transparency while reducing transaction costs for trading. Most importantly, the development of a wholesale price at the Irish gas trading point – the Irish balancing point (IBP) – would ultimately benefit domestic consumers and reinforce the Irish wholesale market liquidity. Experience with the new IBP platform suggests a strong correlation between IBP and NBP prices. If there is a failure of the interconnectors, gas at the IBP would be sold to the market at a significant premium to the NBP price. This would help the market to achieve a new balance between supply and demand.

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