Equivalent to just 61p per week off the average bill, this reduction by E.On is the first time that any of the Big Six suppliers have cut their prices.
E.On consequently claimed it now has Britain’s cheapest fixed energy tariff, with the launch of a one-year dual fuel product with an average price of £783.
Dermot Nolan, Chief Executive of OFGEM – the UK industry regulator – said the move is a ‘step in the right direction’ while independent industry analysts said the price reduction should have been bigger.
According to market information provider ICIS, the wholesale price of gas fell by 34% over 2015, largely because of the dramatic decline in the price of wholesale oil and gas and Ann Robinson, director price comparison site Uswitch, said: “With wholesale prices predicted to remain low this year, consumers should be seeing bill reductions of at least 10% – around £120 a year – on both gas and electricity.”
David Hunter, an energy industry analyst with Schneider Electric, added: “Any reduction is welcome but it’s a small amount in comparison to the drop in wholesale gas prices of –32.6% in the last year. Standard electricity tariffs still haven’t shifted, despite wholesale costs dropping –21.4% in the last year.
“Seven out of 10 consumers are on standard energy tariffs and won’t switch supplier. Remember, the juice still comes down the same pipes and wires. With more than 30 suppliers in the market, consumers should be shopping around.
“Meanwhile the energy companies rely on you to do nothing and you pay a high price for your latency. Some are overpaying by as much as £500.
“The energy companies appear to be relenting their grip on tariffs, but only just. E.On is the first of the Big Six to move, apart from British Gas, in a year. Yet this reduction is only on the standard tariff, and only on gas.
“Despite wholesale energy prices falling like a stone (gas down a third and electricity a fifth in a year), these cuts are too modest. Anyone on a standard tariff is overpaying, it’s as simple as that.
“This fall in energy bills is temporary. Oil, gas and the rest will rise again and probably with a vengeance. Consumers can insulate their household budget by investing some of the savings now to permanently reduce energy use and carbon footprint, and protect themselves against any price rise.”
Meanwhile, the Competition Authority has announced a delay to publication of its long-awaited investigation into the UK energy market.
The publication of the provisional decision on remedies has now been put back to March to allow the CMA to fully consider responses received following publication of additional findings and remedies in relation to prepayment customers before Christmas (16/12/15).
This means that the final report is now scheduled to be published in June. The absolute statutory deadline remains the 25 June 2016.