There are a lot of tools online for comparisons of different electricity plans and telling customers how much money they can save on home energy bills by switching.

These will often tell you how much your current electricity is going to be in the next year, and how much you could save by switching to different recommended plans.

But how do these tools arrive at the estimated annual bills they present to customers?

Electricity Time of Use Tariffs

Different electricity plans will come with different tariff bands for how much electricity costs at any given time of the day. Your electricity consumption is divided between those different tariffs based on either your input or assumptions about average usage.

This is the rate which will apply for most of the day, or all of the day if you are on a 24hr plan. The Day Rate typically applies from 8am to 11pm, except for Peak hours if they apply.

A Peak Rate is something which you will only find on Smart Tariffs, and then not all of them. During Peak hours, from 5pm to 7pm, electricity is more expensive than the normal Day rate.

The Night Rate is lower than the Day or Peak rates, and typically applies from 11pm to 8am, unless your electricity plan has Night Boost/EV hours.

This is an extremely discounted rate which will apply for several hours in the very early hours of the morning somewhere from 2am to 6am.

Discounted Electricity Rates

Switching your electricity plan each year is critical to make sure you are on the lowest possible tariffs.

It’s free to switch and it can save you thousands.

Electricity Tariff Discounts

Many electricity plans advertise a discount on their standard rates which could be anywhere from 5% to 30%. The level of the discount will vary from provider to provider, and may also depend on factors such as if you are signed up for direct debit payments and online billing.

Calculating Electricity Usage

For different types of electricity plans, calculators make assumptions about the amount of electricity which is being used at different times, unless specified otherwise.

The average annual electricity usage by a household in Ireland is 4,200kWh, and calculators will use this national average unless you enter a figure based on your own electricity consumption.

How this is divided up between the different time of use tariffs depends on the plan in question.

All of the electricity usage is calculated at a single rate, making for a very simple calculation.

With a Nightsaver or Day/Night plan the electricity consumption is divided between Day and Night Rates. Unless the user enters how much electricity they use during the night it will work off the national average.

  • Day Rate: 62% of electricity consumption between 8am and 11pm
  • Night Rate: 38% of electricity consumption is between 11pm and 8am

The majority of smart plans will have tariffs divided between Day, Peak, and Night Rates. The assumed electricity consumption in each of those times we use is:

  • Day Rate: 54% of electricity consumption between 8am and 11pm, excluding 5pm to 7pm.
  • Peak Rate: 9% of electricity consumption between 5pm and 7pm
  • Night Rate: 37% of electricity consumption between 11pm and 8am

Electricity plans with an EV tariff are trickier since they can come in many forms. A plan with an EV/Night Boost tariff might have one price for all other hours, it might have Day & Night rates, or it might have Day/Peak/Night rates alongside the Night Boost rate.

Fixed Electricity Charges

Any electricity bill will also come with a number of fixed charges which do not change regardless of how much of little electricity is used. These are the Standing Charge, PSO Levy, and Prepayment Service Charge in the case of Pay-As-You-Go electricity meters.

A standing charge is a daily fee which covers the cost of providing gas or electricity to your property and servicing your account. With electricity comparisons, it will typically be shown as an annual fee for the entire year.

The PSO Levy is a charge applied to all electricity customers in Ireland which supports the growth of renewable energy. The levy is calculated annually, and is currently set at €38.74 before VAT.

This is a special charge which is only applied to customers who have a Pay-As-You-Go electricity meters and plans which is part of servicing those customers.

VAT on Electricity

All electricity products and fees are subject to VAT of 9%. This includes the electricity rates and all other fixed charges.

Electricity price comparison tools will typically show an estimated annual bill both with and without VAT.

Estimated Annual Bills

When you use an electricity comparison tool it will typically tell you what your electricity bill will be for the next 12 months on your current plan, and how much you can save by switching to a new plan.

To do this it must calculate the estimated bill for the year for the current plan, and all the plans it recommends. These will require two different sets of calculations, with the one for your current plan being more complicated.

Recommended Electricity Plans

The electricity plans which are recommended to you by a calculator will provide and estimated annual bill based on the tariffs of the plan, any specified discount on those tariffs, and the relevant fixed charges over the period of the contract.

Other factors which can also be taken into account include any cash bonus which is offered to customers signing up for the first time.

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Your Current Electricity Plan

For the cost of the next 12 months on your current electricity plan the cost must be divided between how much time remains on your current contract, and the standard plan you will be moved onto once that expires.

If you signed up for a 12 month contract with a 20% discount on electricity rates, for example, then at then end of that period you will likely be moved onto an equivalent standard electricity plan with little or no discount. 

This is fundamentally why it is so important to switch electricity providers and plans regularly to avoid being charged much more than you need to pay.

So if you have six months remaining on your current contract, then to estimate the bill for the coming year your annual electricity usage must be divided in two, with half calculated based on the current plan, and half on the more expensive standard plan.

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