EDF cut gas bills: British Gas and SSE follow suit

EDF Energy announced a 5% cut in gas bills this week, and British Gas and Scottish and Southern Energy quickly followed with similar announcements.

The energy companies indicate that a sharp fall in the price of wholesale gas over the winter has prompted the move.
The Energy Secretary Chris Huhne is calling for the other major suppliers to also cut their prices. The summer saw gas price rises by as much as 19% amongst the major energy suppliers and the signs that they may be falling will be welcome relief to many.

However, British Gas announced a cut to their electricity bills rather than their gas bills, as they expect wholesale gas prices to continue to rise, even though there had been a short term fall.

The price of wholesale gas fell by 9.2% since November. British Gas estimate that their 5% cut in electricity tariffs for approximately 5.3 million users will see an average of £24 savings on their annual bills.

EDF Energy estimate that their 1.4 million customers will save an average £38 on their annual gas bill.

Scottish and Southern Energy followed EDF and announced a drop in gas prices of 3.8%, but they suggest that this could be worth an average £28 a year in savings for their 3.5 million customers.

The remaining energy giants, Scottish Power, NPower and E.On have yet to announce any savings, although may do soon.
Adam Scorer from the Consumer Focus watchdog indicated that drops in wholesale energy costs should be reflected in customer prices. He added that companies react differently, depending how they expect wholesale prices to change.

The choice to cut electricity bills by British Gas rather than gas bills has prompted debate in the energy market. British Gas argue that it is too early to predict what will happen to gas prices in the future.

A spokesperson for Energyhelpline.com suggested that the decision by British Gas will cause confusion for customers. They added: “The maths do not seem to add up so British Gas need to do something on gas as well if they want to look like they are passing on wholesale falls fairly.

It may be interesting to note that a 5% gas price cut would have cost British Gas more than double this electricity price cut.”

EDF Energy also argue that customers actually want fair, clear and transparent prices and argue that they have been the most active in the market, being the last supplier to announce price rises last year and the first to announce falls this year.

The Energy Secretary Chris Huhne welcomed the drop in prices and called for the rest of the major energy suppliers to follow EDF Energy’s lead. He went on to indicate concern of energysuppliers responses to wholesale price changes, suggesting that they tend to rocket when they go up, but ‘fall like a feather’ when they go down.

Other smaller energy suppliers have also announced price cuts or cancellations of previous price rises.