Ovo Energy presents itself as a contender, as it makes a massive cut to its gas prices; potentially embarrassing the Big Six energy suppliers, whose price cuts are less than half as much as Ovoís.
Even more embarrassing, Ovoís cuts are as much as eight times larger than the reductions that were promised by EDF!
The Big Six had made excuses for why they could not make larger cuts ñ explaining that because they had purchased large amounts of gas prior to the fall in wholesale price, that no savings could be passed on to the end consumer. However, Ovoís generous cuts may have the reduced the chances of these excuses being accepted by customers.
The price slashes will become effective on the 1st of March, meaning that there will be reduction to their standard variable tariff of 5.8 per cent, allowing for an average customer saving of roughly £65.
It will be the 11th price cut that Ovo has made in just 18 months.
Only customers who are on variable tariffs will see a benefit from the price cuts on this occasion, but Ovo has within the past few weeks also made a 5.5 per cent cut to its fixed tariff.
These cuts have been much appreciated by the government, as Ed Davey, the climate change secretary commented: ‘Energy companies can’t hide ñ this shows what’s possible when it comes to cutting bills.
‘The old energy giants are facing record competition thanks to our reforms and it’s bill payers who will benefit.
‘If people aren’t satisfied, now is the time to shop around and join the huge numbers who are switching and saving hundreds of pounds.’
Ovo estimates that the average dual fuel expense for its customers who are on a standard variable rate will be around £1,051, reduced from £1,116.
The Big Six have tried to give cuts to their customers to reflect the decreasing price of gas, but these cuts have not been perceived as enough. The wholesale price of gas has dropped by 28 per cent within the past year; meanwhile the Big Six have only cut their prices by an average of four per cent.
Again, the excuse being supplied is that the drop in wholesale price will only affect half of the average energy bill, and that gas had been bough before the drop in price occurred. Added to this, it is argued that their overheads have not changed at all, and that therefore the cuts that they have made are in-line with the reduction in the wholesale price of gas.
They have promised that if the price of wholesale gas continues to fall, that they will try to pass on these savings to the customer as best as they can, but that they may be somewhat reluctant to pass on large savings prior to the General elections in May.
This is primarily because in 2014, Ed Miliband promised that if Labour was voted in, that they would freeze energy bills for the next two years. If energy suppliers were to cut their prices now before the election, they may be unable to increase them in the future.
Figures that have been provided by Energy UK revealed that 1.3 million customers moved from a larger supplier to a smaller one within the past year, which is equal to 41 per cent of total switches.
Ovo has been one of the biggest profiteers of these switches, and can often be found at the top of best buy tables.
The chief executive of Ovo stated: ‘Our track record for passing on savings to our customers speaks for itself. Last year we were the first energy supplier to bring bills under £1,000 and over the past 15 months we have reduced our prices eight times.
‘During that time, OVO has consistently been in the top ten cheapest suppliers in the UK, regularly in the top five and on average 15.2 per cent cheaper than the Big Six.’
Big Six Energy Cuts
Supplier Change Comes into effect
Eon Gas: Down 3.5% 13-Jan
British Gas Gas: Down 5% 27-Feb
ScottishPower Gas: Down 4.8% 20-Feb
Npower Gas: Down 5.1% 16-Feb
SSE Gas: Down 4.1% 30-April
Ovo Energy Gas: Down 10.4% 1-March
The government has been supporting the prevalence of smaller energy suppliers, which are seen as healthy competition for the Big Six and as a sign that the energy market is moving in a direction that favours homeowners. Households can now save as much as £400 on their energy bills by switching supplier ñ especially if they have not switched in the past.
Save money on your energy bills by comparing Energy Prices with MoneyExpert.com and earn up to £25 cashback if you switch your gas and electric suppliers.