Summer sparks competitive energy deals – but increasing wholesale costs are starting to bite
The price of the most competitive deals offered by the largest energy suppliers fell by 10% or £107 in the three months to September compared to the same period in 2015
This summer, big six suppliers reduced the cost of their lowest priced tariff by an average of £121 to £829, closing the price gap between their smaller rivals
The four most popular smaller providers reduced their cheapest tariff by an average of £85 to £779
Lower wholesale prices this summer compared with summer 2015, along with the lifting of Ofgem’s four tariff limit on suppliers, helped drive more competitive deals
More recently, wholesale prices have risen sharply, forcing some suppliers to replace their cheapest tariffs with more expensive plans
Uswitch.com is urging consumers to shop around and get a better deal ahead of winter, as increasing wholesale costs could force more suppliers to increase the cost of their most competitive tariffs.
The average price of the cheapest energy deal offered by the UK’s biggest energy suppliers fell by 10% or £107 in the last year, according to new data from Uswitch.com, the independent price comparison and switching site.
The analysis, which looks at the cheapest tariff of each of the ten biggest energy suppliers in the three months to September in 2016 and 2015, also reveals that big six providers are closing the price gap with their smaller rivals. The big six reduced their lowest priced deal during the summer by an average of 13% to £829, while the four most popular smaller providers lowered their cheapest tariff by an average of 10% to £779. E.ON led the pack with the biggest reduction, slashing its best deal by 27% or £287, followed by npower with a 16% or £154 cut.
**Table 1: Cheapest tariff of the 10 biggest energy suppliers during the period July-September 2015 and July-September 2016**
| Cheapest tariff Jul-Sep 2015 | Price | Date launched | Cheapest tariff Jul-Sep 2016 | Price | Date launched | Difference | |||
|---|---|---|---|---|---|---|---|---|---|
| E.ON | E.ON Energy fixed 1 year v16 | £1,047 | 11/02/2015 | E.ON Saver Fixed 1 year v1 | £760 | 14/09/2016 | £287 | ||
| npower | Online Price Fix October 2016 | £940 | 13/07/2015 | Online Price Fix August 2017 | £786 | 11/07/2016 | £154 | ||
| Co-operative Energy | Fair & Square October 2016 | £901 | 10/08/2015 | Co-op fix for longer September 2017 | £770 | 07/04/2016 | £131 | ||
| EDF | Blue + Price Promise November 2016 | £894 | 08/09/2015 | Simply Fixed October 2017V2 | £780 | 30/09/2016 | £114 | ||
| First:Utility | isave fixed December 2016 v3 | £840 | 26/09/2015 | First Fixed November 2017 v2 online | £755 | 23/09/2016 | £85 | ||
| SSE | SSE 1 Year Fixed | £858 | 11/07/2015 | SSE 1 Year Fixed v8 | £782 | 04/08/2016 | £76 | ||
| Extra Energy | Fresh Fixed Price Dec 2016 v2 | £841 | 24/09/2015 | Fresh Fixed Priced October 2017 v1 | £769 | 12/02/2016 | £72 | ||
| ScottishPower | Online Fixed Price Energy October 2016 | £883 | 29/09/2015 | Online Fixed Saver November 2017 | £820 | 20/09/2016 | £63 | ||
| OVO | Better Energy (all online) | £876 | 11/08/2016 | Better Energy (all online) | £823 | 15/01/2016 | £53 | ||
| British Gas | Fix & Reward September 2016 | £1,075 | 16/07/2015 | All current British Gas Plans | £1,044 | Varied | £31 |
Source: Uswitch.com analysis, October 2016
Uswitch.com believes the reduction in the cost of many suppliers’ best tariffs this summer is, in part, due to lower wholesale prices compared with the same period last year, as well as the lifting of the four tariff limit on suppliers by Ofgem. This move came ahead of the Competition and Markets Authority’s final energy investigation report, enabling suppliers to launch new, exclusive competitive deals.
More recently, however, increasing wholesale prices – due to more expensive energy imports from the falling value of sterling following the EU referendum and future energy supply concerns – have led some suppliers to replace their best summer deals with more expensive plans. Co-operative Energy removed its cheapest deal in mid-July and its best plan today is £131 more at £901 a year. Ovo’s best tariff is currently £94 more expensive at £917 and npower’s lowest plan is £91 more at £877.
Despite this, many of the largest suppliers continue to offer tariffs at the same price or less, including First Utility, E.ON, EDF and SSE, meaning there are many competitive deals for consumers looking to cut their bills ahead of winter.
**Table 2: Cheapest tariff of the 10 biggest energy suppliers in the period July-September 2016 and best available today**
| Cheapest deal between July- September 2016 | Cheapest deal available today | Difference | |||
|---|---|---|---|---|---|
| £760 | £756 | -£4 | |||
| npower | £786 | £877 | £91 | ||
| Co-operative Energy | £770 | £901 | £131 | ||
| EDF | £780 | £780 | – | ||
| First Utility | £755 | £755 | – | ||
| SSE | £782 | £782 | – | ||
| Extra Energy | £769 | £851 | £82 | ||
| ScottishPower | £820 | £819 | -£1 | ||
| Ovo | £823 | £917 | £94 | ||
| British Gas | £1,044 | £1,044 | – |
Source: Uswitch.com analysis, October 2016. Prices correct as of 12th October 2016.
Claire Osborne, Uswitch.com energy expert, says: “Lower wholesale costs this year compared with 2015, along with moves by Ofgem to enable suppliers to offer exclusive tariffs, have helped drive competition in the market and bring down prices.
“More recently, rising wholesale costs have forced some suppliers to up the price of their best deals. There are still many competitive tariffs available on the market – for now at least – but they may become more expensive if wholesale prices continue to rise.
“Consumers who are concerned about their energy bills going up, especially as we head towards winter, should shop around to see whether they can switch to a better tariff and consider fixed deals which provide protection against potential price rises.”
FOR MORE INFORMATION
Jason Wakeford
Phone: 0203 872 5612
Email: jason.wakeford@uswitch.com
Twitter: @UswitchPR
Notes to editors
See table 1 in press release. Averages worked out from overall savings between summer 2015 and summer 2015
See table 2 in press release
The analysis only includes deals available on the open market (e.g. excluding collective switch schemes). Some suppliers’ cheapest tariffs are not available to their existing customers.
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