Energy cuts could have and should have been bigger

3 February 2015

The recent price cuts by all of the UK's six major energy firms could have and should have been bigger and done sooner, according to analysis from consumer group Which?.

All of the Big Six companies announced price cuts over the past month, citing the drop in wholesale gas prices as the reason why they were in a position to pass some savings onto their customers.

But Which?'s research of market data found that suppliers had failed to keep standard variable energy tariffs in line with the failing wholesale prices over the past two years, meaning households on standard energy tariffs were £145 worse off compared to last year and £2.9 billion in total.

It said the recent cuts of up to 5.1% should have been in the region of 8.8% to 10.3% if they were to match the drop in wholesale prices - the equivalent of a decrease between £777 million and £907 million a year - to homes on standard gas tariffs.

Which? has submitted its findings to the ongoing Competition and Markets Authority investigation into the energy market, amid concerns over a lack of real competition in the energy market.

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Question mark on prices

Which? executive director, Richard Lloyd said: "Our analysis places a massive question mark over how suppliers have been setting prices over the last two years. They now need to explain to their customers why bills don't fall further in response to dropping wholesale prices. Energy bills are consistently the top consumer concern so it's about time people got a fair deal.

"While the competition inquiry should establish beyond doubt whether the price people are paying today is right, consumers will now look to politicians of every party to set out how they'll deliver fair and affordable energy prices in the future."

In response to the findings, Lawrence Slade, the chief executive of energy trade body Energy UK, said: "Customer deals are falling in price - over £100 cheaper than this time last year. The Which? calculations are based on very many assumptions and do not reflect the cheaper deals we are seeing."

Meanwhile, it has been announced water bills will fall by an average of 2%, or £9, a year from April.

Among those who will see the biggest drop in their bills will be customers with Anglican. Their bills will reduce by 7%, or £29, taking the average yearly cost to £402. Southern customers will get a 6% reduction, which is a saving of £27 and will take their annual bill to £410.)

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