Energy price war looms, but it won't cancel out 2011 rises

Jan 12, 2012

British Gas and SSE announce cuts after EDF gets the ball rolling

HOUSEHOLDERS are set to benefit from a New Year price war among energy companies after EDF Energy, British Gas and SSE, which owns Southern Electric and Swalec, all announced price cuts. However, the cuts do not cancel out the large price rises that were introduced last year.
EDF Energy became the first of the Big Six providers to reduce tariffs on Wednesday when it said it would lower its gas price by five per cent in February.
British Gas then announced today that it was cutting the price of electricity by the same amount with immediate effect. It says the move will save the average customer £24 a year. Within minutes SSE had announced it would reduce gas bills by 4.5 per cent at the end of March.
Last year all the major energy suppliers introduced double-digit price rises for both gas and electricity, citing an increase in wholesale prices. The Guardian reports that British Gas upped its prices for gas and electricity by 18 per cent and 16 per cent respectively.
And, as The Daily Telegraph notes: "Energy bills for British Gas customers will still remain well above their levels before the company raised prices... last summer."
The paper adds: "The Big Six suppliers have come under mounting pressure from the government and consumer groups to reduce bills as gas wholesale prices have fallen since August, with smaller suppliers Co-Operative Energy and Ovo both cutting prices."
Consumer groups welcomed the move, but there was some scepticism over the fact that British Gas chose to reduce electricity rather than gas prices, as EDF and SSE have done.
Mark Todd of told the BBC: "It may be interesting to note that a 5 per cent gas price cut would have cost British Gas more than double this electricity price cut."

Sign up for our daily newsletter