Energy price cuts on the horizon - Gas and electricity - News - Moneyfacts


Energy price cuts on the horizon

Energy price cuts on the horizon

Category: Gas and electricity

Updated: 02/12/2013
First Published: 02/12/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In welcome news for consumers, energy firms are announcing plans to cut energy prices or freeze bills in the wake of the Government's review of green levies. Most householders will see a reduction by an average of £50 – although this will be after the latest price rises come into effect, meaning that overall, bills will still be higher than they are currently.

However, it should offer welcome relief for those who were worried about how the inflation-busting price rises would affect their budget, with many of the major energy firms so far announcing either a reduction or a freeze in response to the Government's proposed package of measures.

Under the changes, some of the green levies placed on energy firms will be reduced to ensure those savings can be passed onto customers. Some green policy targets have been slowed down while some fuel poverty subsidies have been moved into general taxation, with the £12-per-customer Warm Homes levy being removed as well as a reduction in the Energy Companies Obligation (ECO). Currently, firms have to provide insulation or other energy-saving measures to 400,000 homes per year, but this will be replaced by a tax-funded programme which will see applicable homebuyers being offered a £1,000 stamp duty rebate (approximately) to make their home more energy-efficient.

These measures, says the Government, should reduce the average dual fuel energy bill by £50. The plans will be outlined in full during Thursday's Autumn Statement, but here's a quick overview of the energy firms that have so far responded to the announcement:

  • British Gas has said it will cut bills by an average of £53 from January (two months after its £123 price rise comes into effect, thereby making it a 5% rise as opposed to a 9% rise).
  • Npower has said it won't raise prices until 2015 unless wholesale prices go up, and has pledged to reduce its 10.4% price hike (implemented this weekend) once it's worked out how much the Government's changes will save them.
  • SSE will pass on the savings by April which will see its planned rise reduced to just over 4%.
  • EDF won't raise prices anymore until 2015. Their 3.9% price rise was announced in November and was over half that of some of its competitors, reflecting the expected changes to policy.
  • E.on, which hasn't yet announced a price rise, has said the Government changes mean prices won't be as high as they could have been – perhaps indicating that a small price hike could be on the cards.
  • Sainsbury's Energy is reducing prices by 3.2% from January.

Mark Todd, director of price comparison site, comments on the news:

"The combination of the latest price rises, competitive deals from smaller suppliers and the bowing of British Gas to public pressure over pricing has resulted in the biggest savings ever for switchers. Savvy consumers can now save up to £370 on dual fuel bills, meaning that Christmas will be slightly cheerier, and the New Year more bearable for cash strapped households.

"[However] customers who have never switched can still save around £300 on a cheap fixed deal that will provide stability and savings. As icy polar winds freeze the country, a low cost energy fixed tariff is really the must-have accessory this Christmas… In the ever-changing market consumers need to make sure they act to get the best deal and switch where savings can be made."

What Next?

The advice is still to compare energy tariffs and, if applicable, switch to a low-cost fixed rate, so check out our pick of the best energy buys and see how much you could save.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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