Published on 2 Dec 2013 Sections , ,

Energy companies announce cuts in bills

Three of the “big six” energy companies in the UK vow to freeze or cut household bills in response to a government initiative.

British Gas said it would reduce gas and electricity prices by an average of 3.2 per cent – equivalent to a £41 discount from the average dual fuel bill which, combined with a government rebate, would mean an average £53 discount for customers.

Scottish & Southern Energy said it expects a saving for the typical dual-fuel customer of around 4 per cent before the end of March, equivalent to a saving of around £50 for a typical dual-fuel customer.

Meanwhile Npower has said it does not plan to increase energy prices before spring 2015, unless there are increases in wholesale energy costs or network charges.

The moves are a response to a government plan to cut energy costs. The initiative, expected to be announced in the chancellor’s autumn statement, will see the government cut the cost of the energy company obligation (ECO), an insulation scheme delivered by major energy suppliers. It is hoped this move will shave £30 to £35 off energy bills.

Additionally the government rebate on the warm homes discount scheme is expected to reduce costs by a further £12.

‘Not off the hook’

The government said that all major energy providers had promised to pass the savings from the government plan on to customers.

“Today’s package also ensures that energy companies are not off the hook,” Energy and Climate Change Secretary Ed Davey said.

“They will keep up their efforts to help people in fuel poverty cut their bills by making sure their homes leak less heat, and they will have to be more transparent about what they’re spending on social and environmental measures.

“Next year, our competition test will forensically examine what more we can do to get prices down through ferocious competition.”

“This won’t affect our commitment to tackling dangerous climate change through reducing Britain’s CO2 emissions, which will be backed by £540m in new investment to make sure Britain’s homes and public sector buildings are more energy efficient, permanently reducing their bills.”

‘Bail out’

However Labour, which has pledged to a two-year energy bill freeze, has dismissed the government’s announcement as “bailing out” energy companies.

Read more: power to the people - smart meters, lower energy bills?

Shadow environment secretary Caroline Flint will say later on Monday: “If David Cameron and Nick Clegg think just doing what the energy companies ask of them is the answer to bills being too high they are wrong.

“Energy bills have gone up by £120 this winter alone, so even with a £50 cut in levies, people’s bills will still be higher this winter than last year.

“The real reason bills are rising year on year without justification is because the energy market is broken. Instead of bailing out the energy companies, David Cameron should stand up to them and stop them overcharging people.”