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Follow the leader: npower announce price cut

Fourth big six supplier says it will cut prices by 5.1%

npower today became the fourth in line to announce that it would reduce the cost of its standard plans in the wake of declining gas prices.

The saving will be to the tune of 5.1% — or roughly £35 a year for the average household — and will take effect 16 February.

Acquiescing to demand

As with E.ON, British Gas and ScottishPower before it, npower has noted that it is because wholesale gas prices have come down that they are able to in turn reduce costs for consumers.

Paul Massara, CEO of npower parent company, RWE, said of the news:

“Today’s announcement means we can get the benefits we are seeing in the wholesale market to our customers pockets as soon as possible.  We have balanced this wholesale price fall against increases in the other costs we are charged.  If there are further falls in wholesale prices, we will keep these under review to see if we can cut further.”

Not without a fight

Previously, suppliers had responded to demands to lower costs in line with wholesale changes with excuses including wholesale energy being purchased ahead of use by its customers, and that gas costs only make a part of energy bills.

Meanwhile, during price rise announcements in autumn 2013, every supplier blamed rising wholesale costs (as well as other expenditures including higher distribution costs and government subsidies) for the change to consumer prices.

‘Hard-pressed consumers deserve more’

This has lead many to claim the more recent reduction are simply not enough.

Ann Robinson, Director of Consumer Policy at uSwitch said of the npower cut:

“This might be the fourth price cut from the big six suppliers but standard tariff consumers are still not getting a fair deal this winter. With wholesale gas prices falling for months on end, the price cuts so far seem token gestures. And, with wholesale electricity costs down too, it’s also high time for reductions on standard electricity tariffs.

“The price cuts so far are a small step in the right direction but hard-pressed consumers deserve more to help deal with sky-high energy bills. In the meantime, customers can give themselves their own price cut by moving away from expensive standard tariffs to more competitive new deals, which could be £330 a year cheaper.”

Round-up of 2015 price cuts and effective dates

Supplier Change Comes into effect
E.ON Gas: down 3.5% 13 January
British Gas Gas: down 5% 27 February
ScottishPower Gas: down 4.8% 20 February
npower Gas: down 5.1% 16 February