Scottish Power have become the third of the Big Six energy providers to announce cuts to standard gas prices, following E.ON and SSE, and undercutting both of them by 0.1%.
Scottish Power announced today that from March 15th this year, customers on their standard tariff can expect to pay 5.4% less than they currently do for gas. This follows SSE’s cut of 5.3% which itself followed E.ON’s cut of 5.1%.
The cuts will only affect those on standard tariffs, and will not affect prices of customers on dual fuel plans, or on any fixed plans which are already much cheaper than standard tariffs. For those who will benefit, says Scottish Power, they can expect their annual bills to fall by around £32.
As with the previous two providers’ cuts, questions have been raised as to whether or not they have gone far enough, in the face of much larger wholesale cuts for both gas and electricity recently.
Criticism has come from a variety of sources, from Uswitch’s Ann Robinson to the Prime Minister himself.
Energy providers have been quick to defend the lack of price cuts for dual fuel customers (and indeed the size of the cuts generally), stating that the wholesale gas provision only accounts for less than half of the overall price of the tariff and so trickled down, the large drops in wholesale costs don’t directly amount to quite such drastic cuts for customers.
E.ON made similar defensive claims after they were criticised for the size of their cuts.
For Ann Robinson, these claims just aren’t good enough.
She said, in a press release: “this is yet another demonstration that the energy market is broken. In a healthy, competitive market, drops in wholesale prices – which make up around half of bills – would be passed on.”
She said that rather than the 5% we’ve been offered, “we should be seeing reductions of at least 10%”, and that these reductions should apply to both “gas and electricity” on standard tariffs.
All of the providers in question do offer much cheaper plans than their respective ‘standard tariffs’, but a combination of customer apathy and lack of promotion mean that a significant number (70% in some cases) of customers are stuck on standard plans. And it is these customers that are being “ripped off” (to quote Martin Lewis), by over £300.
Robinson offers some sage advice to such customers, saying that “instead of waiting around for token-gesture price cuts,” they should rather “do their own price cut by switching to a cheaper fixed deal, saving more than £320 a year.”
The rest of the Big Six (Npower, British Gas and EDF) have not yet announced price cuts, but it is expected that they will follow suit and will most likely make cuts of a similar size – in and around the ball park of 5%.