Gas and electricity Updated:
Scottish Power has become the latest of the Big Six energy suppliers to cut its standard gas prices this winter, following on from the cuts announced by E.ON and sse in recent weeks. It's also reduced prices by the largest amount, pledging to cut average gas bills by 5.4% – more than E.ON's price cut of 5.1% and SSE's of 5.3% – which could result in an average saving of £32 per year.
However, once again, the price cut only applies to its standard gas tariff, which means that those on fixed rate dual fuel deals – nearly half of Scottish Power's customers – won't benefit.
The reduction also isn't being implemented until 15 March, after the peak season of energy usage has typically come to an end, which again means that many people won't be able to benefit this winter (so far, E.ON has been the only supplier to implement its price cut during the winter months, with its 5.1% reduction coming into force yesterday).
While any reduction in energy bills will be welcome, many are arguing that suppliers haven't gone far enough. Industry regulator Ofgem recently revealed that wholesale energy costs have fallen by around a third over the last 18 months, and both it and the Government have called on the industry to pass on bigger – and quicker – price cuts.
However, Scottish Power says that the reductions in wholesale gas prices have been "partially offset by increases in non-energy costs including transportation costs and metering", which means it isn't able to pass the complete saving they've made from falling wholesale costs on to consumers.
According to industry analysis, wholesale costs make up less than half a typical household energy bill, which is why average prices haven't been cut by a more significant amount.
Even so, this explanation won't be good enough for many consumer groups – Mark Todd of energyhelpline argued that, even though there are more aspects to an energy bill than wholesale costs, such a dramatic fall should have at least enabled suppliers to pass on price cuts of up to 25%, something they're simply not doing.
Despite the latest round of price cuts, the only way to save a noticeable amount on your energy bills is to shop around and switch – particularly if you're currently on a standard tariff. Scottish Power's annual reduction of £32 could pale in comparison to potential savings of up to £539 that could be available if you switched to a low-cost fixed rate tariff, so compare deals in your area and see if you could really benefit.
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.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.