British Gas, EDF and Southern Electric and Scottish Hydro (SSE) have all announced plans to reduce the price of utility bills. While this may seem like great news initially for consumers, there are some things to consider before switching suppliers.
British Gas has cut its electricity prices by 5% and SSE has cut its gas tariff by 4.5%. This sudden move comes just one day after EDF Energy announced their plans to cut 5% off their domestic gas tariff.
The movers and shakers in the energy world have been doing just that by swiftly announcing price cuts in order to avoid any ‘ugly ducking’ scenarios. Three out of the ‘Big Six’ have announced price reductions following the domino effect sparked by smaller energy companies at the beginning of the year.
Initially, Co-Operative Energy and Ovo announced that they were to cut prices by 3% and 5% respectively. The leading six energy companies control 99% of the domestic market though, meaning that their actions are always bound to have more of an impact.
EDF Energy followed suit by reducing the price of its domestic gas tariff by 5%, however, it’s still keeping the price of electricity at the same level.
The other key players in this ‘hotbed’ of energy prices include Npower, E.On and Scottish Power. They are currently likely to be feeling the pressure to reduce their rates as the wholesale cost dips.
Ian Peters, Managing Director of Energy at British Gas, said; “We want to keep prices as low as possible for our customers. Household budgets are stretched, and we are doing everything we can to help our customers keep their bills down.”
One way to ultimately reduce your bills, aside from only boiling enough for one cup of tea, is by switching suppliers. This could potentially see your bill reduced by hundreds of pounds.
Another great way to reduce your household bills is by looking into cheaper home insurance.
Whilst British Gas and other companies may claim to recognise the importance of keeping consumer bills down, the price cuts do little to ease the high cost of utilities.
Average cost of utility bills has increased over the last 18 months
The average cost of a dual fuel bill has increased by 21% over the last 18 months, adding an extra £200 to the annual bill. Consumers are still paying a relatively high amount compared to 2010 figures though, regardless of a 5% cut.
Last autumn, British Gas increased the cost of their electricity by 16% and the cost of gas by 18%. SSE increased their gas prices by 18% and electricity by 11% and EDF increased their gas by 15.4% and electricity by 4.5% respectively. Following a mild winter, bills are still expected to be extremely high this month as a result.
The latest move by British Gas will see a reduction of £24 on the annual domestic bill, hardly something to shout about.
EDF don’t offer much comfort for consumers either. Their 5% reduction on gas bills means that only £38 will be knocked off the annual bill.
Adding fuel to the fire, some of the energy firms are not introducing these rates until a later date. For example, the EDF price cut will begin on 7th February. SSE will not implement their new prices until late March.
The British Gas price cut will come into effect immediately, allowing them to label themselves as the cheapest provider…. for the time being.
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