As the final price cut to standard gas prices by a big six energy supplier takes effect this Thursday, Consumerwatch asks if the savings to consumers’ bills are worth the paper they are written on.
New analysis from uSwitch.com reveals how the tariff reductions will impact ‘fuel vulnerable’ consumers who spend 10 per cent or more of their annual income on energy.
And the study shows that the average reductions to big six standard dual fuel tariffs amount to just 2.2 per cent, or £28 a year, from the average bill.
Following the cuts, 4.5 million fuel vulnerable households will still be left spending 10 per cent or more of their income on energy – a reduction of 287,000 homes.
However, a 10 per cent reduction in standard tariffs – more in line with falling wholesale costs – would lift a staggering 1.3 million homes out of fuel vulnerability, over one million more than have benefitted from the modest cuts so far.
uSwitch.com is calling for suppliers to urgently pass on double-digit reductions to consumers to better reflect reductions in wholesale gas and electricity costs.
The new analysis is published two days before SSE implements the final reduction of the big six to standard gas deals.
SSE will implement a 4.1 per cent reduction to its standard gas tariff from Thursday, following cuts in January by E.ON and in February by British Gas, ScottishPower, npower and EDF Energy.
It is estimated that around 60 per cent of customers – some 15.8 million homes – are on standard variable energy tariffs. Following cuts by all six major suppliers to standard gas plans, the average dual fuel bill has dropped by a mere £28 a year to £1,237 from £1,265 at the start of January 2015.
Ann Robinson, Director of Consumer Policy at uSwitch.com, said: “These figures show just how disappointing this year’s price cuts have been for hard-pressed consumers. With the average big six standard tariff customer just £28 a year better off, it’s little wonder that many consumers see the reductions as little more than token gestures.
“We urge suppliers to look at what more they can do to help customers – many of whom have admitted to going cold this winter simply to cope with energy prices. We believe the Government can also help by extending the Warm Home Discount scheme.
“In the meantime, consumers should take control of their bills by using less, wasting less and paying less for their energy. With £340 a year difference between the average big six standard tariff and the cheapest fixed deal on the market, consumers could be better off making their own price cut by switching.”
10 per cent slash would help 110,000 families
According to uSwitch, the number of fuel vulnerable households in Yorkshire and the Humber at the end of 2014 (before price cuts) was 520,000.
After the 2.23 per cent decrease in average dual fuel bills is applied, less than 10,000 households have been lifted out of fuel vulnerability.
However if the 10 per cent ‘double digit’ decrease being urged by uSwitch was applied, the total number would be slashed by more than a fifth, lifting 110,000 families out of fuel vulnerability.