The energy giant SSE have announced plans to cut gas prices by 4.1% from 30 April, making them the penultimate of the ëbig sixí suppliers to reduce their rates. SSE say that this will save the average household £28 a year.
They announced the reduction in gas price in a trading notification for the first nine months of their financial year. It was also revealed that SSEís profits would be in line with those of the last 12 months. Moreover, they publicized a drop in the number of households using its electricity and gas- they were down from 9.1 million customers on 31 March 2014 to 8.71 million on 31 December.
Along with SSE, there have been similar announcements from all the other big energy suppliers except EDF. Npower announced on Friday a 5.1% reduction in gas which will end up saving £35 a year for 1.3 million customers. The chief executive, Paul Massara, said: ìTodayís announcement means we can get the benefits we are seeing in the wholesale market to our customersí pockets as soon as possible.î The price cuts are the results of the plummet in the wholesale prices for gas largely due to the reduction in the price of oil worldwide.
Further to this, SSE have made the pledge to freeze prices for their 7 million customers until June 2016, extending the original pledge made last year by seven months.
SSEís chief executive, Alistair Phillips-Davies, stated: ìCustomers are at the heart of SSEís business, and our work to secure their energy supplies in wholesale markets until last spring enabled us to guarantee that prices would not increase until at least January 2016, showing we are committed to treating all of our customers fairly and to giving them stable prices over the long term.î
However, energy companies have come under criticism for not responding sooner and reducing their tariffs by a more significant amount. Energy Secretary Ed Davey commented that while it was ìgood newsî to hear of reductions, there were more significant savings to be made by customers if they were to look around and compare.
SSE responded to the criticism by arguing that wholesale prices make up only half of the total bill for suppliers and that people had to be aware of other costs such as government levies like green taxes and smart-meters.
SSEís director of GB Domestic, Steve Forbes, pointed out: ìWe were the only supplier to freeze prices and we promised we would cut them if we could; now weíre delivering on that promise with an average £28 reduction in gas bills.î
The behaviour of energy suppliers around falling wholesale prices has led to a full scale investigation of the industry overseen by the Competition and Markets Authority (CMA), with a report due to be published in May or June of this year.
Gillian Guy, the chief executive at Citizens Advice, who is following the investigation closely, said: ìThe domino effect we see each time one of the large energy companies reduces prices yet again reinforces the need for the Competition and Markets Authority investigation to leave no stone unturned. With marginal difference between price cuts, customers need to know whether the market is working for them and if they are getting value for money.î
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