Price cuts: the industry reaction

Npower became the fourth member of the big six to cut its standard gas tariff this week, following Eon, SSE and Scottish Power in responding to calls from energy secretary Amber Rudd, Ofgem chief executive Dermot Nolan and consumer groups to reflect dramatically falling wholesale prices. But for many critics, the cuts – all in the region of 5 per cent – are too little, too late.

Here’s what the industry said:

“Npower is now the fourth of the Big Six to take a step in the right direction by dropping its standard gas price and I urge other suppliers to follow suit.

“The government is also taking action to keep bills low by making it easier and quicker to switch, rolling out smart meters to every home and business, and increasing competition in the energy market”.

Secretary of state for energy and climate change Amber Rudd

“We really should be seeing bigger retail cuts than we have seen so far. The best protection for customers in the long run is a fully-competitive market.”

Ofgem chief executive Dermot Nolan

“Households are paying over the odds on their energy bills. Wholesale costs are plummeting but consumers aren’t feeling the benefit. The industry as a whole urgently needs to step up to the plate – suppliers need to play fair with customers and start passing on the major savings they have been making from cheap wholesale costs.”

Citizens Advice chief executive Gillian Guy

“Around 45 per cent of the average dual-fuel bill is wholesale costs. What isn’t coming out is all of the costs that are added on to consumers’ bills that are outside of a supplier’s control.

“When you look at that, and you look at a world where we are actually decreasing our consumption of gas and electricity due to energy efficiency measures, that reduces quite substantially the room that any supplier has to reduce bills at a time when wholesale prices are coming down.”

Energy UK chief executive, Lawrence Slade

“Price reductions are welcome for customers struggling with their energy bills. However, falling costs mean other suppliers have passed on reductions quicker, so it’s disappointing this doesn’t take effect until the Spring.

“The regulator must use the competition inquiry to ensure it introduces measures that fix this broken market so that it works for consumers.”

Which? executive director, Richard Lloyd

“The pressure has been piling on providers, who have dragged their heels on passing savings from the wholesale cost of gas and electricity on to consumers.

“So while we wait for the remainder of the Big Six to address the cost of their standard tariffs, consumers can rest assured the best deals can be won by switching, not by staying on standard tariffs.”

MoneySuperMarket energy expert, Stephen Murray

“It looks as though a winter price war is well underway as suppliers battle it out to rule the roost in the best buy tables. But, while the price of fixed deals is plunging, the cost of standard tariffs continues to fall like a feather.”

Tom Lyon, energy expert at uSwitch.com

“The energy companies appear to be relenting their grip on tariffs, but only just. Yet these reductions are only on the standard tariff, and only on gas. Despite wholesale energy prices falling like a stone, these cuts are too modest.”

Schneider Electric energy industry analyst, David Hunter