Delays to energy price cuts cost customers £47m

11th February 2015

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Households are losing an estimated £47 million in total because energy price reductions have been delayed by up to three months.

New analysis from Citizens Advice highlights how small and delayed price reductions made by the largest energy suppliers in the last few weeks will do little to help people afford to heat their homes over the winter months.

Today, EDF’s 1.3% price cut comes into force. E.ON is the only large supplier whose cut took immediate effect, meaning its customers already are feeling the benefit.  SSE customers have to wait three months before they get any savings as its reduction only starts on April 30.

As the temperatures drop Citizens Advice is calling on suppliers to take urgent action to help people afford bills by:

Prepayment customers are charged an extra £80 a year, on average, for their gas and electricity.

Citizens Advice called the top-up system “outdated” as people can only add money to their meter by going to a local shop – a task made more difficult by treacherous weather.

The table below reveals the amount each supplier has cut their prices by, when the cut comes in effect, savings each customer misses out on and estimates the total amount lost by all customers from each supplier:

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Last month Ofgem’s supply market indicators estimated energy firms’ profits may increase to £114, up £9 from November 2014 and £37 year on year.  Yet some bills will only go down as little as £9.

Citizens Advice chief executive Gillian Guy said: “The latest price cuts are an empty gesture by most suppliers.  If energy companies really wanted to pass on savings to their customers they should have reduced prices further and immediately not leave households struggling over the coldest weeks. E.ON did cut bills straight away and others firms should do the same.

“The recent cold snap means people are spending much more on heating their homes now than at any other time of the year.  With suppliers expected to make bigger profits this year prices need to come down further and prepay customers should be offered a debt holiday.

“The Competition and Market Authority needs to take a close look at how firms have cut prices this winter and assess whether the industry is behaving competitively and offering people a good deal.  The industry’s approach to the latest price reductions suggests firms take their customers for granted and don’t understand how difficult it is for some people to afford to have a warm home.”

Last month Citizens Advice revealed there is as much as a £200 difference between the cheapest deals currently offered by suppliers and their standard tariffs.

The differences between the cheapest and standard variable dual fuel tariffs for each of the Big Six energy firms from 20 Jan:

CABtable2

Citizens Advice is urging customers to call up their supplier and make sure they are on the cheapest deal available.

With prepayment meters often installed to recoup debts, a proportion of each top-up goes towards paying off arrears.  Delaying debt repayments until the weather warms up could prevent significant numbers of prepayment customers from rationing heat and hot water or cutting off their supply altogether.

As part of its Fair Play for Prepay campaign Citizens Advice is calling on suppliers to offer prepay customer easier ways to top up their meter including online and over the phone.

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