Following EDF’s announcement to reduce gas prices by 5%, the other suppliers from the big six have followed suit with similar announcements to either reduce prices or fix them until 2013. Energy wholesale prices have been falling massively since last year and this 5% reduction is measly. This feels more like a marketing trick to appease the growing misery suffered by households. Whilst we welcome the reductions; the energy companies in only October increased their prices sharply for both gas and electricity at a time when wholesale prices were falling.
Electricity Wholesale Prices Feb 11 – Jan 11 (Source: Spectron)
Electricity £/MWh Gas P/Therm
We would like energy companies to do better than this and pass on further reductions and start thinking about consumers rather than their profits. They were very quick to pass on rising costs when wholesale prices were going up but have been extremely slow in passing on price cuts following market falls.
The current prices levels are putting more families in fuel poverty where they are spending more than 10% of their household income on fuel. The only saviour welcomed by most families is the unusual mild temperatures this winter which has probably saved many families from freezing. With uncertain global economic conditions and times of austerity we need energy companies to do their bit and ease the pressure on household bills at a time when they are struggling to make ends meet.
We would have liked the energy companies to have made bigger cuts and to have used this as an opportunity to redeem themselves and regain some consumer trust rather than get headlines. Most intelligent journalists will have seen through this sham marketing trick and largely backfired. It is amazing that the some of the largest energy companies can all drop ‘selected’ tariffs 5% in unison and no one in Ofgem thinks it is worth investigating. Why 5%, why now?
Our conclusion: If energy companies are not careful, they will have the same public appreciation as the banks that pulled the economy into crisis. They are hugely profitable business and need to use the fossil fuel commodity price fall to re-energise the country and pass the saving on.