Green levies and energy price rises

Gas and electricity price rises and cuts to green levies

With each of the big six energy suppliers announcing winter price rises and shortly afterwards price cuts, you can be forgiven for being a bit confused.

The truth is that, although there have been price cuts of roughly £50 announced by each of the big six (except those which took them into account for their initial price rises), they are far from wiping out the 2013-2014 winter price rises.

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Government cuts to green levies FAQ

By how much will energy bills go down?

First of all, let’s be clear: the price drops do not wipe away the winter price rises. It is highly likely that you will be paying more for your energy in 2014.

With that in mind, most households will see their energy bills go down by about £50 as a result of the cuts, but will see their overall energy bill go up by £53 due to the winter price rises.

energy price rises

Why are energy prices going down?

The price drops are primarily a result of a government decision to cut green levies. These will see many consumers save approximately £38 on their energy bills.

A further reduction of £12 will be offered to most energy consumers in autumn 2014.

Together, these two reductions are roughly equal to the £50 amount often referred to when talking about the 'government-led price cut'.

When are suppliers implementing the cuts?

EDF Energy and E.ON anticipated the cuts and took them into account for their initial winter price rises. As a result, neither has announced any changes due to the cuts.

  • The first supplier to cut bills was British Gas, which implemented changes on 1 January 2014.

  • ScottishPower followed suit and implemented changes on 31 January 2014.

  • npower passed savings on to customers on 28 of February 2014.

  • SSE was the last to pass on savings and did so on 24 March 2014.

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Will all customers benefit from the entirety of the cuts?

This depends on what tariff you are on as well as your supplier.

British Gas and SSE will be passing on all savings to each of their customers.

At present, npower and ScottishPower* will not be passing on savings to those on price plans who did not see their prices go up as a result of winter price rises. This includes people who were on fixed price plans before the winter price rises were implemented.

ScottishPower has justified this by stating that 97% of those on a fixed price plan are already paying less than they would had they been on a variable plan, despite the new price cuts. EDF Energy and E.ON will not be passing the full cuts onto their customers, as the companies took cuts into account when raising their prices this winter.

This stance has been criticized and many organisations, including uSwitch, are calling for reductions to be made universal. There has also been criticism levied at the big six for the amount of time it is taking some of them to implement the cuts.

The vast majority of customers will be granted a one-off £12 reduction on their bills in autumn 2014 as a result of a government rebate.

*ScottishPower will make an exception for customers who are on a fixed price plan with higher rates than variable tariffs, following the implementation of the price cuts.

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