Energy companies slow to pass on cuts

Households hoping for more affordable energy bills this year should prepare for disappointment.

Energy cuts from large providers have been “low and slow” according to consumer comparison sites, and could amount to little more than a blip in the trend of rising gas and electricity bills.

Customers with E.ON and EDF Energy, the latest providers to announce they are lowering costs, will still be paying around a third more for their energy use than they were last year.

From the end of March 4.1m E.ON customers will pay on average £44 less each year for their electricity. Bills for gas use will remain the same.

Analysts have pointed out that the £44 reduction looks measly when compared with the average price increase of £384 faced by E.ON customers over 2008.

EDF electricity bills will be cut by 8.8 per cent, or £40, on average from 31 March.

Customers hoping for serious cuts in energy bills on the back of falling wholesale gas prices have been left disappointed. Energy suppliers have opted to cut prices by just 5 per cent on average this year.

“It is becoming increasingly clear the levels of price reduction people want to see will not take place in this round of price cuts,” said Scott Byrom, utilities manager at moneysupermarket.com.

British Gas has already announced it is cutting gas costs by 10 per cent, and Scottish and Southern Energy has said it will cut prices by 4 per cent on average for gas, and 9 per cent for electricity.

With RWE Npower and Scottish Power yet to announce comparative cuts, there remains a glimmer of hope that future price cuts will be more substantial, and that suppliers which have already made cuts might make more later in the year.

However Will Marples, energy expert at uSwitch.com, believes the price cuts are nothing more than a blip in the trend of rising prices.

He advises households to shop around for the best deals, think carefully about how they pay their bills and aim to reduce their bill as much as possible by using less energy, rather than wait for further cuts.

The cheapest tariff available on the market is the Websaver 1 from British Gas, which costs on average £1,058 a year. This is nearly £200 less than the company’s standard tariff.

Moving to dual fuel tariffs, paying by direct debit and signing up to an online plan can also result in a saving of around £350 each year for households.