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Energy bills: Which ‘Big Six’ companies are cutting their prices?
How do the latest energy price developments affect you?
After weeks of deliberating and political jostling, it seems the government is finally set to act in a bid to reduce energy prices.
Reforms are set be implemented in two areas. One, the Energy Company Obligation deadline will be extended, and two, the money for the Warm Home Discount will be raised through taxation rather than people's bills. It's a step the coalition appears to have been considering for some time, and the Chancellor now looks set to make the announcement in the Autumn Statement.
Once introduced, the measure is expected to reduce the average household's annual energy bill by an estimated £50 - but is this enough to negate the latest price rises, and will consumers notice a significant long-term difference?
What is happening to energy bills?
To begin with, the reason that the majority of the Big Six are reviewing their energy prices is because the reforms mean it will be cheaper for them to provide households with energy. As such, the suppliers don't stand to lose anything by reducing bills.
One thing that is notable about the latest reports is that a number of energy providers have now committed to keeping their prices at the same level until 2015 - provided there are no substantial fluctuations in the wholesale cost of gas and electricity.
This doesn't amount to a price freeze as there is no formalised guarantee that rates will be held, but it does suggest the government is urging the Big Six to resist another round of hikes next winter.
Who is reducing energy prices?
Not all of the Big Six will be reducing their prices at the same time. Indeed, some will not be cutting them at all because their recent pricing decisions have been made in anticipation of government reforms.
Below is a list of the suppliers that are reducing their charges, including when the cuts are set to come into effect and how big a difference people can expect to see in their bills (based on average household consumption and standard variable tariffs):
- British Gas will be dropping its prices by £53. This will come into force in January, but does not outweigh the £123 increase the supplier announced two months ago.
- SSE says it will be cutting its charges by an estimated £50 some time before April 2014. This comes on the back of a £105 jump the company unveiled in October.
- RWE Npower has revealed that it will be reducing prices, although it cannot say by how much until the figures have been properly worked out. The supplier also said that - providing wholesale costs do not increase - they will not raise their charges until spring 2015. Npower announced a £128 increase in bills earlier this winter.
- Scottish Power says it will pass savings on to consumers when it can, but said that other factors - namely wholesale costs - could put upward pressure on prices in the future.
That leaves EDF Energy and e.on. The former announced a 3.9% rise in November - based on the expectation that the government would reform green levies - so will not be making any savings that can be passed on to consumers. e.on says it doesn't anticipate having to increase prices as a result of social or environmental obligations over the course of the next 18 months, but also points out that an increase to wholesale costs could force its hand.
Will bills be lower?
The simple answer to this question is that, in the majority of cases, bills will now be lower than they would have been had the government not taken any action. However, households will typically be paying more for their energy than they were last winter because the recent reductions are not enough to offset the latest price rises.
As such, the recent announcement should in no way be seen as an antidote to switching, which remains the most effective way to ensure you're paying the lowest price possible for your energy.