The nation’s largest energy supplier has reduced its gas prices by 10%, but customers will have to wait until late February to benefit.
British Gas says its price cuts will shave £84 off the average customer’s annual bill, and the new rates will be implemented on the 19th of next month.
The fact customers will only benefit from reductions one week before the high consumption winter season comes to an end will be a bitter pill to swallow for many – especially given the fact that wholesale
energy prices have been plummeting since last summer.
Fuel poverty affects millions
Wholesale energy roughly tracks the price of oil, which has fallen from around £100 a barrel last July to less than £30 at the start of January.
But
energy prices have remained stubbornly high during this time, and following a colder than usual start to winter, it is estimated that over five million households have now been thrust into fuel poverty (defined as anyone spending over 10% of their income on energy).
Critics have accused the energy suppliers of profiting off their customers’ misery, and expressed fears that they would delay passing on cuts until after the winter period in order to maximise revenues.
Given that the other five big suppliers are now widely expected to follow British Gas’ lead and announce similar cuts in late February/early March, it seems those fears have proved well founded.
Backlog between purchase and consumption
Of course, energy suppliers will point out that customers have had to wait for
price cuts because there is a delay between buying gas from the wholesale market and when it arrives in the customer’s house.
In other words, the gas you use now was purchased a while ago, and as it happens the gas that suppliers purchased at a cheaper price will only arrive in your pipes at the end of winter.
The timing is certainly convenient for suppliers, and as consumer groups have repeatedly pointed out, rises in oil prices seem to work their way through the system far faster than price cuts.
How to keep your bills low
If you’re looking to minimise the impact of sky high energy bills, there are a few simple steps you can take.
Switching energy suppliers is a good place to start. Given that suppliers tend to announce price changes at a similar time, it may be worth waiting until all suppliers have done so before searching for the best deal in your area.
You should also ensure you switch to a supplier’s
online tariff (rather than the standard tariff) and pay by direct debit.
Insulation is another handy cost saving initiative. The cost of fitting loft or wall insulation has not increased dramatically in recent years, but the sky-rocketing cost of energy means the potential savings have.
