British energy suppliers have been roundly criticised for failing to pass on the continued low world costs of wholesale energy. This is despite the expected reductions that are being considered by the big six companies, after British Gas announced that their cuts will save homeowners about £35 a year.
It is estimated that some 6.9 million homes will benefit from this particular cut in prices. The 5% reduction in gas prices, which was first indicated in July 2015 but only came into effect very recently, ignited fresh criticism that these energy companies are just not doing enough for their customers and that the cuts should be larger.
Terms like “short-changing” have been liberally banded about, considering the prices that the big six paid for the energy in the first place. British Gas in particular seems to bearing the brunt of the criticism.
“British Gas is the biggest energy supplier so they should really be market leading, setting the trend for the others to follow suit,” said Ann Robinson, uSwitch’s consumer policy director told The Guardian.
Joe Malinowski, a price comparison expert, said that the reduction was “long overdue” and British Gas should have further slashed prices by £70.
The British Gas announcement comes shortly after an energy investigation decided that households were paying £1.2 billion a year over the odds. It concluded that customers bore some responsibility for overspending because they switched suppliers to make savings.
Even after the recent cut, British Gas customers on a standard tariff could save £200 a year by switching to another providers tariff. This report from the Competition and Markets Authority (CMA) found that average prices of tariffs by the major companies over the period 2009 to 2013 were 5% above what they should have been.
Energy is purchased well in advance and some of the suppliers have used the excuse that they paid before world prices started dropping, and therefore cannot afford to reduce their charges at present. However, the world low has now been going on for almost a year, so this excuse is starting to wear thin.
Energy providers originally held off further cuts because they were waiting for the outcome of the general election, with Labour threatening to impose a price freeze. So this recent cut was expected once that threat had been removed.
British gas have also stated that in order to be fairer they have now cut their charges twice in six months, saving their customers over £72 during the course of next year, without taking into account possible further cuts.
“We always cut our prices by as much as we can, as soon as we can, when we see a reduction in our own costs, and we were keen to do this ahead of next winter,” said a British Gas spokesperson.
The other companies have also responded with reductions. This year EON brought down its prices by 3.5%, SSE managed 4.1%, Scottish Power did slightly better with 4.8%, and Npower beat that by 5.1%
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