Gas and electricity Updated:
SSE has become the second major energy supplier to cut energy prices this winter, following hot on the heels of E.ON last week. The energy giant says it'll be cutting gas bills by an average of 5.3% – a shade more than E.ON's 5.1% – with the reduction to come into effect on 29 March.
SSE says that the cut, which applies to its standard tariff, will lead to an average annual saving of £32. It's heralding the fact that it'll be cutting prices three months before its current price freeze is due to end, and that its customers haven't seen a price rise since November 2013 – the new gas prices will be 12% (or £78) lower for an average customer than 2013 levels, it said in a statement.
"When we announced our price freeze, we promised that we would not increase prices but would cut them if we could – and that's exactly what we've done," said Will Morris, managing director of Retail at SSE. "This is our third successive reduction in household gas prices and shows our commitment to getting prices as low as we can and to fight for customers in a fiercely competitive market."
However, despite the fanfare, the supplier has come under fire for the timing of the price cut, with the March implementation meaning that customers won't be able to benefit at all this winter, the time of peak energy usage.
It's also been criticised for only cutting gas prices – following the lead of E.ON – and that only customers on its variable rate standard tariff will benefit, many of whom are already paying far more than they would on typical fixed rate deals.
Energy suppliers have been coming under increasing pressure in recent weeks to cut their prices following last year's dramatic fall in wholesale energy costs, but the most recent reductions have been branded as "token cuts", with many arguing that the energy giants could have gone much further.
"SSE's promise of gas price cuts of 5.3% at the end of March is another token gesture following the 50% collapse in wholesale prices that suppliers pay," said Mark Todd of comparison site energyhelpline.com. "What's even more disappointing is that taking two months to come in, winter will be well gone before any SSE customer sees the benefit. It's surely too little too late to quell customers' anger."
SSE's Will Morris has given an explanation for the seemingly low price cut, saying that "wholesale energy prices account for an ever-smaller proportion of the bill and there are different cost issues affecting electricity and gas". However, it may not be enough to satisfy consumer groups, or consumers themselves, many of whom won't be able to benefit in the short term.
It's hoped that, as two of the Big Six suppliers have now passed on standard price cuts, the rest will follow suit. "A domino effect is likely to follow", said Mark Todd, as the rest will be promoted "to abandon their sloth-like attitude and pass on fairer deals to consumers". However, he cautions that we shouldn't expect too much – as the latest price cuts show, the savings will probably be minimal, and only those on standard tariffs will actually benefit.
"While this may look like a price war, these small cuts are to horrendously over-priced standard tariffs – it's a phoney war and these tariffs are best avoided," he said. "Suppliers could be doing much more for their loyal customers; they appear to not even be passing on half of the savings they are getting."
So just what can you do? The answer – not wait around for suppliers to pass on paltry price cuts. The best way to save money on your energy bills this winter and beyond is to take the initiative and switch tariffs, and those on standard variable rates could save even more. The £32 annual saving from SSE could pale into comparison if you switch to a fixed rate tariff, with typical customers able to save as much as £539 by switching. So why stay put?
"If you want a cold home and a big bill, stick with the other 70% on an overpriced standard tariff," said Mark. "If you want a reasonable price and a warm home you must take a few minutes to switch. The UK energy market is a ruthless place; if you don't shop around, you will get ripped off. The Government and regulator will not protect you – you must protect yourself."
Compare gas and electricity prices to see if you could save more than a token £32
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