20th January 2015
Scottish Power has become the latest supplier to cut gas prices, but critics argue that its reduction of 4.8% is “half-hearted” in comparison to the 20% drop in wholesale costs.
The cut, which will not take place until February 20, follows a reduction of 3.5% by E.On last week, which has already taken effect. British Gas yesterday said it would lower prices by 5%, but not until February 27.
Customers on Scottish Power’s standard tariff will make an average saving of £33 on their annual gas bills as a result.
Energy bills are a hot political topic at the moment because of Labour’s pledge to freeze prices if it were to get into power. The Conservatives are claiming that the policy is preventing companies from passing on greater savings to consumers now.
Caroline Flint MP, Labour’s shadow energy and climate change secretary, said: “This latest price cut shows that Ed Miliband was right to challenge the energy companies to pass on the falls in wholesale costs to consumers. But given wholesale gas prices have fallen by at least 20 per cent, a price cut of just 4.8 per cent means consumers are only seeing a fraction of the savings. This price cut has also been delayed for a month, meaning consumers won’t see any benefit at all until winter is almost over.
“The next Labour government is committed to making big changes in our energy market: freezing energy prices until 2017 so that bills can fall but not rise, and giving the regulator the power to force energy companies to cut their prices and pass on the full savings from wholesale cost falls to all consumers.”
Gillian Guy, chief executive of Citizens Advice, said: “All energy firms have a duty to pass on savings to their customers. Just as with British Gas and E.On, Scottish Power’s gas bill reduction has fallen short for consumers after rocketing prices. Energy companies must look to pass on wholesale costs by cutting electricity bills, not just gas.”
She added: “Energy bills are up a third since 2010 yet figures show wholesale costs at a four-year low. People are falling into arrears with rent and council tax debts as they struggle to make ends meet.
“Consumers should call up their supplier to ensure they are on the cheapest tariffs instead of accepting these modest reductions. Customers on energy prepayment meters can pay a yearly average of £80 or more for a second-class service. Citizens Advice wants to see energy suppliers reduce prices for all customers, not just those able to switch to get the best deals.”
Ann Robinson, director of consumer policy at uSwitch.com, said:“Whilst it’s great to see another supplier cutting prices, single digit price reductions fall short of the double digit fall in wholesale energy prices.
“Scottish Power has also launched a new fixed-term dual fuel deal for £930 a year – over £230 cheaper than its reduced standard plan – so customers should shop around to check that they are on the best tariff.
“All eyes will now be firmly on EDF, npower and SSE to follow the lead of E.ON, British Gas and Scottish Power, and cut their standard prices to help hard-pressed consumers with energy bills this winter.”
Stephen Murray, energy expert at MoneySuperMarket said:“Scottish Power’s announcement today marks the half-way point of cuts from the Big Six energy suppliers. Unfortunately, again it feels half-hearted when set against a recent 20 per cent cut in wholesale gas price. Pressure continues to mount on the last three energy giants who are yet to announce any savings.
“It’s disappointing to see Scottish Power following British Gas’ lead by not enforcing this price cut immediately, instead it is making customers continue to pay higher bills at a peak time of year for energy usage. This also pales in comparison to the huge bill cut possible if you take the bull by the horns and become your own energy boss. An average monthly direct debit customer can benefit from savings of up to £256 by switching to Extra Energy’s Fresh Fixed Price Jan 2016 v8.1 So take charge now to make the pounds stay in your wallet.”