SSE has now become the fifth of the “big six” energy suppliers to cut the price of domestic gas supply. This follows similar price cuts by British Gas, E.On, Scottish Power and Npower. EDF is now the only one of the “big six” to have not cut domestic gas prices, though this may just mean they will be the last company to announce price changes.
SSE is the name of a company that trades under a number of other names in different parts of the country. It may therefore be more familiar to consumers under names like Southern Electric, Scottish Hydro and Swalec. The company supplies both gas and electricity, and has roughly 8.7 million customers across the UK. It claims that around three million of those customers – on gas-only or variable dual-fuel tariffs – will benefit from the price cut.
The price cuts come as a result of cuts in wholesale prices, resulting in savings for the energy companies that can be passed on to the consumer. Following plummeting oil prices, the price of wholesale gas has also dropped significantly over the last few months.
As well as announcing cuts to prices, SSE has also said that its existing guarantee not to increase the price of gas or electricity within a certain period will be extended. This is likely to involve an extension of at least six months, which would make the guarantee valid until July 2016.
The company’s director of GB domestic, Steve Forbes, said “We were the only supplier to freeze prices and we promised we would cut them if we could; now we’re delivering on that promise with an average £28 reduction in gas bills.”
However, the energy companies that have so far cut prices have come under some criticism for the way these cuts have been implemented. In particular, they have been accused of making only “token” price cuts which fail to meaningfully pass on much larger savings to their consumers. Citizens Advice executive Gillian Guy, for instance, accused energy firms of carrying out “a phoney price war” and said that “Token energy price cuts to standard tariffs do not reflect the big savings that energy firms can pass on to households.”
Defending the decision not to cut prices further, SSE said that the wholesale cost of energy is “less than half of the typical household energy bill.” The company went on to say that “There are significant other costs within energy bills, including those relating to government-sponsored environmental and social policies and the roll-out of smart meters.”