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Energy customers could save £250 on fixed tariff, says Ofgem Energy firms accused of 'token' cuts in the price of gas
(about 3 hours later)
Energy customers could save up to £250 a year by switching to a fixed-rate tariff, the regulator Ofgem has said. Energy firms are being accused of "token price cuts" and failing to pass on larger savings to their customers.
That is despite the fact that four energy companies have cut their standard rates for gas in the last two weeks. Citizens Advice said people could save up to 25% off bills by switching from a standard rate tariff to a fixed rate.
In the latest move Npower cut its variable gas tariff in the UK by an average of 5.1% from 16 February. The regulator Ofgem said some households could save as much as £250 a year by moving to a fixed-rate.
It will mean the average customer on a standard tariff will save around £35 a year. It comes after Npower said it will cut gas prices by 5.1% from 16th February, and would consider more reductions if wholesale prices fall further.
But even so, Ofgem said most people would be better off on a fixed-rate deal. It will mean the average customer on a standard - or variable rate - tariff will save around £35 a year.
Four of the big six suppliers have now cut their charges in the last two weeks.
'£266 a year'
But consumer groups said some of the energy companies are not treating customers fairly.
"Energy firms are engaging in a phoney price war," said Gillian Guy, the chief executive of Citizens Advice.
"Token energy price cuts to standard tariffs do not reflect the big savings that energy firms can pass on to households."
The regulator, Ofgem, also advised consumers to consider fixed-term tariffs.
"While recent price cuts are a step in the right direction, many customers could be better off to the tune of up to £250 by moving from a variable rate to a fixed rate deal," said Dermot Nolan, Ofgem's chief executive."While recent price cuts are a step in the right direction, many customers could be better off to the tune of up to £250 by moving from a variable rate to a fixed rate deal," said Dermot Nolan, Ofgem's chief executive.
One price comparison site put the potential savings even higher.One price comparison site put the potential savings even higher.
MoneySuperMarket said customers could save up to £266 a year by moving to the cheapest fixed-rate deal.MoneySuperMarket said customers could save up to £266 a year by moving to the cheapest fixed-rate deal.
NPower's is the largest cut announced by a supplier so far, following a significant fall in wholesale gas prices since the Autumn. However several of the big six suppliers said they went out of their way to publicize their best-value tariffs.
British Gas, E.On and Scottish Power have all announced price cuts within the last couple of weeks. "As well as including details on our cheapest tariff on all of our bills - we are also one of the only energy suppliers who have actively targeted our own customers who have never switched to encourage them to find cheaper deals," said a spokesman for Scottish Power.
However, the suppliers have been criticised by consumer groups for not cutting prices more. Npower's is the largest cut announced by a supplier so far, following a significant fall in wholesale gas prices since the Autumn.
Wholesale prices have fallen by as much as 20% since November 2014. British Gas, E.On and Scottish Power have all announced price cuts within the last couple of weeks, as a result of falling wholesale prices.
But the suppliers argue that the wholesale price only makes up around half an ordinary gas bill.But the suppliers argue that the wholesale price only makes up around half an ordinary gas bill.
"If there are further falls in wholesale prices, we will keep these under review to see if we can cut further," said Npower chief executive Paul Massara."If there are further falls in wholesale prices, we will keep these under review to see if we can cut further," said Npower chief executive Paul Massara.