Fuel bills may decrease up to 7% for big six suppliers

The main big six fuel providers are starting to finally pass savings on to their customers. The government and various “watchdogs” have been putting increasing pressure on them, and they are even getting ready to kick off an investigation into these companies. So maybe in an effort to try to fend that off, companies such as Scottish Power and British Gas are reducing their tariffs.

To date, three of the providers have announced they are cutting gas prices, with the other three expected to follow shortly. E.ON is cutting prices by 3.5%, and Scottish Power will cut almost 5% effective 20 February. British Gas also announced rollbacks of 5%, but theirs will not take place until 27 February. Other providers are expected to make announcements soon.

Now the question being asked by many watchdog agencies is why are the big six taken weeks to pass on savings to consumers. Some experts say the prices are being kept high so the companies can get the extra margin they are earning for their shareholders. Also, this delay will not help many families during the winter months, when their fuel bills are the highest. However the winter is also when these gas companies make a large per cent of their profits, so by keeping prices high, they make more money.

Another question is that with oil prices fallen by about 40 per cent over the last 6 months or so, but the reduction being passed on may only be 4 – 7%, what is causing the discrepancy. So while monthly bills will be going down for about 11 million families, the amount still seems minimal when comparing that to the reduction in oil prices. In fact, may consumer groups have called for 10% reductions.

Average savings for customers

The reductions being put into place are only for gas bills. Scottish Power expects the average family to save £30 to £35 per year. British Gas customers may see similar savings. However, this will only hold true if the reductions stick. Experts always recommend that customers review their tariffs and switch if they feel they can get a better price from somewhere else.

Citizens Advice will also always recommend shopping around as they state the reductions are just not enough. They advocate for this as companies such as British Gas and E.ON are not passing on wholesale costs for electricity bills, and the reductions do not reflect the high prices that households have been faced with over the last several years.

Since 2010, most people have bills that have gone up one third. However, wholesale costs are now at four year lows, even less than they were in 2010. Due to these challenges in pricing, Citizens Advice strongly recommends shopping around different energy providers, even the independents, for even more savings. Always review tariffs, and ask for the best plans, to ensure the highest savings.