23rd January 2015
Falls in oil prices are finally being passed on to consumers as Npower offers the largest cut in gas costs yet.
The energy supplier has announced a 5.1% reduction to the cost of gas that will effective as of 16 February; this is the largest cut announced by The Big Six and the market is still waiting for announcements from EDF Energy and SSE.
The average Npower customer on a variable tariff will save around £36 a year although energy companies have been criticised for failing to cut their rates sooner.
Wholesale gas prices have been as much as 20% lower since November 2014 but suppliers said the wholesale cost only makes up half of a gas bill and so equal cuts have not been made to consumer costs.
‘If there are further falls in wholesale prices, we will keep these under review to see if we can cut further,’ said Npower chief executive Paul Massara.
Stephen Murray, energy expert at Moneysupermarket, said the Npower cut was an ‘improvement’ but ‘it’s still far form the level it could be’.
‘While a saving of 5.1% is of course a step in the right direction, it’s a drop in the ocean compared to the fact that wholesale prices have dropped by 20% in the last year,’ he said.
‘Effective from 16 February, Npower customers will see overall energy bills fall by £36 a year if paying by monthly direct debit – £1,205 a year, down to £1,169.’
Murray said households did not need to wait until February to make a saving by switching to a cheaper tariff.
‘Households don’t need to wait for cuts from the energy firms to take effect. Instead billpayers could give themselves a much bigger price cut by taking five minutes to shop around for the best energy deal for them,’ he said.
‘The savings are there for the taking – an average standard monthly direct debit customers could typically wipe £266 off their bills by switching to Extra Energy’s Fresh Fixed Price [deal].’