Following E.ON’s recent announcement that they will be cutting the price of gas on their standard tariff by 5.1%, SSE have now said that they will be following suit, and ever so slightly one-upping them by cutting their gas price by 5.3%.
These cuts that are unlikely to be the last from the Big Six have been welcomed in theory, but have equally been put down as little more than “trivial” appeasement of the masses and of politicians. James Padmore from comparethemarket.com has described these latest price cuts as the “Big Six fig leaf.”
Energy companies have, lately, been the subject of much scrutiny over their pricing since wholesale prices for gas and electricity have been plummeting and customers have been yet to experience the same price drops on their end.
After E.ON cut their prices by just over 5%, many commentators were quick to point out that while this represented a step in the right direction, they should have gone much further.
Now that SSE have done the same, the same cries can be heard.
The chief executive of energy regulator Ofgem, Dermot Nolan, said: “this is a move in the right direction, but, if the market is as competitive as suppliers claim, we would expect to see further price cuts. Ofgem referred to the Competition and Markets Authority because we feel competition is not bearing down fast or hard enough on consumer’s bills.”
This was a much more diplomatic statement that that heard from Martin Lewis, founder of MoneySavingExpert.com who said, plainly, addressing customers on standard tariffs: “you’re being ripped off.”
Mr Lewis’ statement came after E.ON’s cuts, but he gave his two cents this time around as well.
“Again,” he said, “it’s just a trivial 5% on gas only, not electricity, nothing close to the drop in wholesale prices. Energy firms must be whooping for joy that they can get away with such small cuts. The real picture here is that even after cuts the majority of household in the UK are massively overpaying for their energy.”
For the most part, it is the standard tariffs from each energy provider that amount to the biggest rip off, with customer on such tariffs overpaying by as much as £300 in most circumstances. The issue is that around 70% of customers are on standard tariffs.
Any customers who start with a supplier on an introductory deal, or pick a fixed term plan, get put on the standard tariff once the initial deal is over, and so many customers who have stuck around with the same supplier for a long time, customers reasonably described as loyal, are those getting stung the worst.
SSE’s cuts become active after Easter, and come after they lost some 300,000 customers over the last nine months, with customers leaving in droves amid criticism based on overpricing and poor quality of service.
SSE’s chief executive, Alistair Phillips-Davis, attempted to put as positive a spin on events as he could, saying that his company has managed to achieve “a significant reduction in the number and duration of power cuts.”