Energy companies update price promises following Govt savings plan

Major energy firms including British Gas and Npower have announced changes to their price promises as they look to pass on savings to customers following Government plans to cut fuel bills, a move likely to spark additional marketing in the coming weeks

Major energy firms have updated their price pledges ahead of a Government plan to cut bill prices.

The price promise updates come just days ahead of Chancellor George Osborne’s Autumn statement (5 December), where he will reveal plans to cut energy bills by up to £50 per annum. A reduction of between £35 and £50 will be achieved through lowering green levies, the chancellor will say, while a further £5 will be saved through utilities firms slashing energy costs. An additional £12 of the sum will come in the form of a Government rebate.

Five of the Big Six suppliers have been quick to make changes to their price pledges ahead of the expected announcement after recent plans to increase bills this winter provoked anger from politicians and customers. British Gas says it will trim annual bills by £53 in January, two months after revealing a £123 increase for average duel-fuel customers.

The Centrica-owned business says it will continue “to do everything” it can to help customers reduce their energy consumption and “keep energy bills as low as possible”. It is currently running advertising to support its “Tarriff Checker service and “Fix and Fall” tariff.

Npower, which revealed in October plans to increase dual-fuel bills by an extra £137, says it will reduce the charges following the Government plan. The energy company is currently calculating how large the reduction will be, claiming energy prices for customers will not rise before Spring 2015 unless “there are increases in wholesale energy costs or network charges”.

In a statement SSE said: “On the basis of today’s announcement and the planned consultation, SSE plans to reduce its household energy prices before the end of its financial year.”

It expects bills to drop annually by around 4 per cent, a 4.2 per cent difference on the 8.2 per cent increase to bills it introduced last month (15 November).

E.ON, the only supplier yet to increase prices this winter, says the Government’s energy announcement “should mean our customers pay less next year”. It does next expect to raise prices in the next 18 months as a “result of social or environmental obligations”.  Meanwhile, EDF announced a price freeze yesterday (1 December), the first energy company to do so, saying it does not anticipate prices to rise again in 2014. It expects the decision to maintain its 3.9 per cent increase from last month to leave customers with bills £80-96 lower than its rivals.

The move is likely to spark a flurry of tactical campaigns from the Big Six in the coming weeks in an attempt to reduce customer churn in light of thousands of billpayers switching suppliers following the planned price hikes.

Labour leader Ed Miliband has dismissed the Government’s plans as “smoke and mirrors”. Miliband has warned that despite the changes, household bills are still set to rise by more than £50 this winter, meaning customers fail to benefit. The party, which has promised to freeze energy prices for two years if they win the next election, will unveil plans to make the sector more competitive later today (2 December).