After years of increasing energy prices, there is finally some good news for consumers. Mild weather so far this winter has led to a fall in the price of wholesale gas and, for once, suppliers are passing on the savings to consumers.
On previous occasions when the price of wholesale gas has fallen, suppliers have failed to cut their prices, stating that as they buy their gas months in advance they can't instantly respond to drops in the market.
However, at the start of this year small energy providers Co-operative Energy and Ovo Energy announced gas price cuts of 3% and 5% respectively. The speed with which both firms were able to cut their prices was put down to their small size.
The cuts piled pressure on the Big Six energy providers and now they have followed suit with price reductions. EDF Energy, Scottish Power, SSE and npower have all announced plans to cut their gas prices.
EDF Energy, Scottish Power and npower tariffs will all drop by 5%, and SSE prices will decrease by 4.5%. Meanwhile, British Gas cut electricity prices by 5% and E.ON will slash electricity tariffs by 6%.
These cuts are "good news for households struggling with high bills", says Ann Robinson, spokesperson for uSwitch.com. "But the cold reality is that they don't go far enough. Many consumers are still struggling with the 21%, or £224, price hike they suffered over the past 18 months".
But the first skirmishes of a price war couldn't have come at a better time for consumers. A survey by the Citizens Advice Bureau (CAB) has revealed that 43% of people are worried they can't afford their next fuel bill. "Hikes in prices have put extra pressure on people's budgets at a time when money is already tight. Day in day out, the Bureau is helping people who can't afford their bills," says Gillian Guy, chief executive of CAB.
The table below gives a full breakdown of all the price cuts announced by the Big Six
|PROVIDER||UTILITY||PRICE CUT||DATE BEGINS|
|EDF Energy||Gas||5%||7 February|
|Scottish Power||Gas||5%||27 February|
|British Gas||Electricity||5%||12 January|
Rates correct as of 17 January 2012
Should you switch?
With all the Big Six energy firms cutting prices, consumers should shop around as there is a good chance you could save money with a switch. You can shop for the best energy plan at energyhelpline.com/moneywise. Whichever firm you choose to switch to will then handle the process with minimal input from you.
"Many of those who haven't considered it previously will be shocked to know they can save up to a third off their energy bill just by moving to a competitive plan," says Robinson. "If this is supplemented by simple energy efficiency measures, such as turning TVs off standby, and by getting information on free insulation in your home, 2012 could see a lot more people feeling slightly happier about their energy bills."