Gas prices could finally fall
E.ON is the first of all the six big gas and electricity suppliers to reduce its tariff after Chancellor George Osbourne’s complaint about such firms not reducing their oil prices for the customer. E.ON supplies 4.5 million households nationwide and has cut its tariff by 3.5% starting today, however the electricity charges remain the same.
This will bring the average bill down by £24 a year to £1,145.14 for those customers who opt to pay by direct debit.
The crude oil price is the lowest it has been in six years at just $45 per barrel and has been reducing since June of last year when it peaked at £115. Until E.ON’s decision there has been no evidence of tariffs being cut to ease household bills.
Critics have already said that the cut is too small. Stephen Murray, energy expert at Money Super Market said: “It’s been three long years since customers last benefitted from price decreases to standard energy bills. To say it has been a long time coming would be the understatement of the year, but finally one of the nation’s big six suppliers has responded to the falling price of wholesale gas and given bills the chop.
“Whilst this announcement is welcome, it is underwhelming in the face of wholesale prices falling around 20% over the past year.”
Murray said that the other 5 energy suppliers will now be under a lot of pressure to keep up with E.ON’s move.
George Osbourne, just last week advised energy firms and airlines to reduce their prices. It has been estimated that families should ideally see their bills fall by an average of £140 due to the fall of the wholesale prices.
It would seem that the lowest a customer should expect if £900 per year, which is £200 below E.ON’s new standard tariff. Ed Milliband’s promise to freeze energy bills for 20 months if Labour comes to power has made the energy firms think twice about reducing their energy tariffs now.
Drivers are already seeing the benefits, with the likes of Tesco offering a litre for just £103.9p and other supermarkets have followed suit. A garage in Birmingham has just begun to sell their petrol at £1 a litre.
Labour has asked for a vote on Wednesday to decide whether to give the regulator the power to force energy companies to reduce their prices.
Caroline Flint, the shadow energy and climate change secretary, said: “This shows that Ed Miliband was right to challenge the energy companies to cut their prices and pass on the falls in wholesale costs to consumers. But given gas prices have fallen by at least 20% a price cut of just 3.5% looks pretty measly and means consumers still aren’t getting the full benefit of falling wholesale prices.
“The other energy companies must now cut their prices too. MPs must back Labour’s motion on Wednesday and vote to give the regulator the power to force them to pass on the full savings from falling wholesale costs to consumers.”
Ofgem, which regulates the gas and electricity market, said: “This is a small step in the right direction. We have consistently called for suppliers to explain the growing gap between falling wholesale prices and retail prices. Cutting prices is an explanation that consumers will understand and in a competitive market we would expect others to follow suit.”
Source: The Guardian
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