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Energy firms accused of 'token' cuts in the price of gas

gas rings Image copyright Thinkstock

Energy firms are being accused of "token price cuts" and failing to pass on larger savings to their customers.

Citizens Advice said people could save up to 25% off bills by switching from a standard rate tariff to a fixed rate.

The regulator Ofgem said some households could save as much as £250 a year by moving to a fixed-rate.

It comes after Npower said it will cut gas prices by 5.1% from 16th February, and would consider more reductions if wholesale prices fall further.

It will mean the average customer on a standard - or variable rate - tariff will save around £35 a year.

Four of the big six suppliers have now cut their charges in the last two weeks.

'£266 a year'

But consumer groups said some of the energy companies are not treating customers fairly.

"Energy firms are engaging in a phoney price war," said Gillian Guy, the chief executive of Citizens Advice.

"Token energy price cuts to standard tariffs do not reflect the big savings that energy firms can pass on to households."

The regulator, Ofgem, also advised consumers to consider fixed-term tariffs.

"While recent price cuts are a step in the right direction, many customers could be better off to the tune of up to £250 by moving from a variable rate to a fixed rate deal," said Dermot Nolan, Ofgem's chief executive.

One price comparison site put the potential savings even higher.

MoneySuperMarket said customers could save up to £266 a year by moving to the cheapest fixed-rate deal.

However several of the big six suppliers said they went out of their way to publicize their best-value tariffs.

"As well as including details on our cheapest tariff on all of our bills - we are also one of the only energy suppliers who have actively targeted our own customers who have never switched to encourage them to find cheaper deals," said a spokesman for Scottish Power.

Major energy suppliers' price changes
Supplier Change Date of change
E.On Gas: down 3.5% 13 January
British Gas Gas: down 5% 27 February
Scottish Power Gas: down 4.8% 20 February
Npower Gas: down 5.1% 16 February

Npower's is the largest cut announced by a supplier so far, following a significant fall in wholesale gas prices since the Autumn.

British Gas, E.On and Scottish Power have all announced price cuts within the last couple of weeks, as a result of falling wholesale prices.

But the suppliers argue that the wholesale price only makes up around half an ordinary gas bill.

"If there are further falls in wholesale prices, we will keep these under review to see if we can cut further," said Npower chief executive Paul Massara.