Scottish Power has become the third of the big energy firms to announce it is cutting gas prices. It will cut its standard domestic price by 4.8% on 20 February.
Over the last year wholesale gas prices have fallen by almost a third, but until recently none of the big six energy companies had cut bills for the 11 million homes on a standard tariff.
Last week E.ON was the first – cutting gas prices by 3.5% with immediate effect. On Monday, British Gas said it would cut its gas prices by 5%, but only on 27 February.
EDF, npower and SSE are likely to announce similar moves, probably this week.
The reductions have all been significantly below the 10% called for by consumer groups and switching websites.
Neil Clitheroe of Scottish Power said the average annual gas bill on the firm’s standard tariff would reduce by £33. Scottish Power also announced a new fixed-price tariff which is one of the most competitive in the market, with an average dual fuel bill of £930. Customers on its standard tariff have been paying £1,200. None of the energy firms have cut electricity bills.
“All Scottish Power customers can take advantage of our best deals by contacting us or visiting our website. Customers already on fixed-priced tariffs can also move between our tariffs at any time, without paying any exit fees,” Clitheroe said.
He said the firm would continue to keep its prices under review. “Our pricing reflects all of the costs that contribute to a customer’s bill. The wholesale price of energy accounts for half of a customer’s gas bill, but non-energy costs such as transmission and distribution networks and environmental and social obligations remain unaffected by any wholesale energy price movements,” he said.
The power firms have been coming under intense pressure to cut bills. Analysis by theenergyshop.com found bills would have been cut by around £140 had the wholesale cuts had been passed on in full. Over the past year there has been fierce competition among smaller suppliers pushing average bills below £900 in some areas, while customers of the big six firms have been paying more than £1,200.
Ed Miliband, who had threatened energy firms with a price freeze if Labour were elected to government, said British Gas’s 5% price fall was “too little, too late”.
Citizens Advice said that the reduction in gas bills announced by Scottish Power has fallen short for 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.
“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. Citizens Advice wants to see energy suppliers reduce prices for all customers, not just those able to switch to get the best deals.”
Stephen Murray, energy expert at moneysupermarket.com said: “It is disappointing to see Scottish Power following British Gas’s 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 supplier.”
