While the price cuts will come as a welcome boost to those who are struggling to meet the cost of gas and electricity bills, they won’t make up for the steep increases which were imposed by all six of the big suppliers last autumn.
British Gas is cutting electricity prices by 5% with immediate effect, SSE's 4.5% reduction in gas prices will happen on March 26 and npower’s standard and capped tariff customers will see a 5% reduction in gas prices from February 1. EDF Energy is cutting the cost of standard gas by 5% with effect from February 7.
British Gas’ move alone will reduce annual electricity bills for its 5.3 million customers on variable tariffs by around £25. Standard dual fuel bills for customers paying by cash or cheque are now £1,260.56. Those on fixed tariffs will not see any change.
SSE’s changes will affect around 3.5million people and mean a £35.05 cut to the cost of standard gas, causing average standard dual fuel bills for customers paying by cash or cheque to drop to £1,229.95.
The energy supplier has also extended its commitment to cap household electricity and gas prices until October 2012 rather than August 2012.
npower is waiving the exit penalties on its fixed tariffs for the next two months, giving customers the opportunity to switch to one of its variable deals if they want to. Customers shouldn’t automatically rush to do this though, as those who fixed before last year’s price increases could be better off staying on their current price plan.
E.ON says the 6% decrease in its standard electricity prices will make the average annual bill £31 cheaper when it takes effect from Monday, January 16.
These latest moves follow a 5% cut in gas prices this week from both npower and EDF Energy, as well as earlier reductions by smaller players Ovo Energy and Co-operative Energy, who have announced they are cutting gas prices by 5% and 3% respectively.
EDF Energy’s changes, which come into effect on February 7, will see bills fall by around £40 a year, benefiting more than 1.4million households, but not those on online or fixed tariffs.
Why has British Gas not reduced gas costs when other suppliers have?
According to British Gas, it is only cutting electricity prices and not gas prices because while there have been some short-term falls in the cost of gas, it claims the longer term trend continues to be upward.
Clare Francis, site editor at MoneySupermarket, said: “The lack of reduction to the cost of customers’ gas bills will be a huge disappointment – especially as British Gas hiked gas prices by 18% in July last year.
"Eyes will remain on British Gas to take another step and pass on the savings for its gas customers, especially after two rivals have announced cuts due to falling wholesale prices.
“It’s understandable that many consumers will be left confused as to why British Gas is saying it isn’t in a position to reduce the cost of gas as well. At a time when energy companies are trying to improve transparency and openness in the industry, these conflicting messages are not helping to rebuild trust.
“Now four of the ‘Big Six’ energy companies have made announcements, the pressure remains on the rest to also pass on the recent falls in the cost of wholesale energy.”
Seek out the best deals
The latest price cuts will come as cold comfort to those who have seen bills soar in recent months. Gas prices went up by an average of 17.4% last autumn, while electricity prices rose by an average of 10.8%, so despite today’s moves, most people will still be paying much more than they were last summer.
It is therefore vital to ensure you are on the best energy tariff for your region and usage. To give some idea of the financial impact switching can have, the average saving from moving from a standard tariff to the cheapest available product, First Utility's iSave v9 tariff is £240, with average annual bills falling to £1,030.
Visit our energy channel to find the best deal.
Please note: Any rates or deals mentioned in this article were available at the time of writing.
Last updated: 16/01/2012