Today, British Gas was the second of the big six to announce a price drop to standard plan customers of 5 percent, which the supplier says will decrease bills for these customers by £37 per year on average.
Last week, E.ON announced a price drop for its standard plan customers of 3.5% (a savings of £24 per year on average), while also releasing what was the cheapest plan on the market.
Knock on effect
While E.ON’s cheapest plan was soon trumped by the small suppliers (who have consistently topped best buy tables throughout 2014), and the news of the price cut was met with trepidation by critics who felt the drop was not enough, it may have started a trend amongst the big six.
British Gas lowering its prices days after E.ON’s announcement is reminiscent of the price rise trend of 2013, when all of the big six revealed price rises within days to weeks of each other.
Now, instead of pushing prices up, the big six are expected to lower prices amongst pressure to have their prices move in line with wholesale gas costs.
Chief Executive of British Gas Iain Conn said of the news:
“We’ve been watching the significant moves in the international energy market extremely closely for some time, with the aim of helping customers with a price cut at the earliest possible opportunity. Operating in such a volatile market, no pricing decision is straightforward.
“We bear the responsibility of managing the risks of buying energy ahead on behalf of our customers, who value the predictability this brings. Taking this decision now, at a time of continuing uncertainty, shows our absolute commitment to pricing competitively, with customers at the forefront of our minds.”
‘Not a minute too soon’
Director of Consumer Policy as uSwitch Ann Robinson stated that:
“With gas prices falling for well over a year now, today’s decision by British Gas to follow E.ON’s lead with a reduction in standard tariff prices hasn’t come a minute too soon for its customers. Lower prices are good news for consumers but we believe that prices can and should be cut even further.
“As two of the big six suppliers have now lowered their standard prices, the pressure is well and truly on EDF Energy, npower, ScottishPower and SSE to follow suit.
“Reductions in standard tariffs are good news for customers, however the biggest savings are to be found by switching to more competitive fixed deals – which are over £250 a year cheaper than the average standard big six Direct Debit standard tariff.”
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