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Price cuts 'will bring relief' to millions of customers - 26/01/2012

Millions of domestic energy customers throughout the UK who have been struggling to meet their bills may be able to benefit from cheap electricity and gas as a result of this month's round of price cuts.

After independent suppliers Co-operative Energy and Ovo Energy reacted to falls in wholesale markets by announcing reductions in their tariffs around the new year, the pressure was on the country's Big Six suppliers to follow suit and pass on the lower costs to consumers.

EDF was the first to do this, announcing on January 11th it would reduce the cost of its gas prices by five per cent.

Chief executive of the firm Vincent de Riaz said at the time: "What customers want more than anything else is fair, clear and transparent prices. We know they want action rather than words."

This led to a series of price reductions from each of the Big Six suppliers, with Scottish Power and npower also committing to five per cent reductions in their gas prices.

Meanwhile, SSE dropped its gas tariffs by 4.5 per cent, while British Gas and E.ON chose to reduce their electricity costs by five and six per cent respectively.

Director of energy at Consumer Focus Audrey Gallacher said the moves "will give much needed relief to millions of households struggling in the current economic climate".

However, none of the country's largest firms committed to reducing both their gas and electricity costs, which could mean millions of people will not see their bills decrease.

Research by energyhelpline.com revealed up to a third of households may miss out on savings, while it calculated the typical annual fuel bill would drop by just £23 as a result of the moves.

"Millions of consumers will feel short-changed by the recent round of price cuts," stated director of the independent price comparison site Mark Todd.

He added: "They will believe they have been left out in the cold at a time when they are crying out for help to deal with the mounting cost of living."

Mr Todd also observed that with the exception of E.ON, all the Big Six suppliers chose to cut the fuel that makes up the smaller part of their customer base.

For example, he noted British Gas' cut will affect five million households, yet it has 10.5 million gas users who will see no benefit.

However, while the cuts were generally welcomed at a time when wholesale prices are falling, there were questions raised about the size of the reductions.

Mr Todd said as the cost of wholesale gas has dropped by 32 per cent since September, there was the potential for cuts of at least ten per cent to be made, yet none of the major energy suppliers offered reductions near this level.

One organisation to criticise the scale of the reductions was Friends of the Earth, which noted the cuts do not come close to cancelling out the large rises in gas and electricity prices announced by all the Big Six firms in the autumn.

Energy campaigner at the group Paul Steedman said "tinkering in the margins" of these hikes will not help fix the UK's "broken" energy system.

He therefore called on the prime minister to set up an enquiry into the energy sector to investigate the level of influence the major providers have.

Ms Gallacher added: "If wholesale prices continue to fall for both, no doubt consumers will be looking to their suppliers to bring their bills down further."

However, energy doctor at the Energy Saving Trust Jessica Forster said people should not "rest on their laurels" and wait for further decreases, but should be proactive and improve the efficiency of their homes.

Performing an energy price comparison could also be a good way to find a better deal, as Mr Todd noted people can typically save upwards of £200 a year by using such a service to switch energy provider.

If you want to find out more about switching energy suppliers and how you could save up to £389 in minutes, click here.

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