Gas and electricity Updated:
SSE has become the latest of the Big Six to cut its gas prices, leaving just one supplier – EDF – to follow suit. SSE's cut of 4.1% will come into effect on 30 April, and will save the typical household an average of £28 per year.
The supplier has said that the price cut means the typical domestic gas bill will be 7% lower than this time last year, and is guaranteeing that it will freeze its standard gas and electricity prices until at least July 2016. It also "remains committed to cutting household energy prices again, if it can," it said in a statement.
"We were the only supplier to freeze prices and we promised we would cut them if we could; now we're delivering on that promise with an average £28 reduction in gas bills," said Steve Forbes of SSE. "Only SSE customers can bank on the fact that their standard energy prices won't increase under any circumstances before July 2016."
However, despite this being the second price cut in the last year, it won't come as much consolation to customers who were expecting a bigger reduction. Wholesale gas prices have fallen by some 30% in the last year, so such a small cut – which is in line with the price cuts of other suppliers – seems almost miserly by comparison.
SSE has the same kind of answer as everyone else – they buy their gas in advance to provide "long-term certainty over its standard prices, [which] can mean reductions to wholesale prices may take slightly longer to have an impact".
The industry as a whole is being criticised for being quick to put prices up when wholesale costs rise, but incredibly slow to reduce them when costs fall. The date of SSE's price cut comes under particular scrutiny, as it means customers will only benefit as the weather becomes warmer – so those struggling to cover the cost of peak winter use won't see much of a benefit.
Mark Todd, director of energyhelpline, says that a price war is now in full swing – but that suppliers could be doing more. "The big suppliers are clustering with price drops between 3.5% and 5.1% just on gas with nothing off electricity, [following] a fall in wholesale gas prices of around 33% since April 2013.
"This begs the question of why suppliers are not passing on even half of the savings they are making on wholesale gas to their customers. Furthermore, there is still no relief for electricity bills, despite a 19% fall in wholesale costs. The cheapest tariffs have dropped by over £100, [but] the average cut so far in standard tariffs is just £32.
"Yet again, the biggest winners in the energy market appear to be the energy suppliers, while cash-strapped consumers are battered by freezing weather and sky-high bills." So, even though SSE's price cut is a positive move, it isn't enough to get too excited about. These days, a saving of a mere £28 won't go very far, so why not see if you can save even more?
"While many consumers may feel powerless or confused when it comes to their energy bills, there are simple ways to stand up against crippling costs," added Mark Todd. "The benefit of shopping around and switching energy providers is clear to see. These price cuts show that if you stay on a standard tariff you are doomed to lose out. Customers need to ditch standard tariffs and get on the cheap fixes that are out there, which can save you between £200 and £400 a year."
Switching suppliers and opting for a fixed rate tariff could lead to far better savings, so don't wait for the reduction to come into effect. Start comparing the options and see if you could end up with hundreds of extra pounds left in your pocket.
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