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Energy Giants Cut Bills Following Oil Price Plunge

Energy Giants Cut Bills Following Oil Price Plunge

Scottish & Southern Energy (SSE) is the latest energy supplier in the ‘Big Six’ to cut their energy prices, announcing cuts of 4.1 per cent from the end of April which it says will reduce customers’ energy bills by £28 per year and it promises that its prices will remain at that level until at least July 2016. While the cut will affect those on SSE’s standard gas tariff, it will not affect those on fixed tariffs and customers who only get electricity from SSE.

The proposed cut is lower than any of the other energy companies to cut their prices, except E.ON who only introduced cuts of 3.5 per cent but did so on the 13th January, rather than having the lengthy delay of 3 months that SSE has proposed before the cuts take effect. The other three energy suppliers in the UK to introduce cuts have chosen similar percentage cuts. Npower will be reducing its bills by 5.1 per cent from 16th February; Scottish power has opted for a lower, 4.8 per cent cut, effective from the 20th February; and British Gas is introducing a 5 per cent cut from 27th February.

The only one of the ‘Big Six’ energy companies not to introduce price cuts is EDF, though this may change in the coming months due to pressure from consumer groups and from the UK Government. Indeed the cuts so far came about after Matthew Hancock, Minister of Business, Enterprise and Energy, wrote to the Big Six demanding that they cut customers’ bills in order to pass on some of the savings made by the companies following the sharp fall in the price of oil. This has been due to several factors but principally low global demand (particularly from China) and an over abundance of supply due to the success of the US fracking industry.

Even though five of the six have given in to pressure to cut prices, energy suppliers have come under fire from critics who have characterised their efforts as a ‘phoney price war’ between competitors, which only pass on meagre savings to consumers in reality. It was as a result of the fall in oil prices that utility companies experienced a reduction in energy purchase costs for utility companies, which has enabled them to cut their prices overall.

 

 

 

 

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