npower rocks the boat but doesn’t sink it

British Gas is yet again looking likely to be a casualty of the energy price war it started only 11 days ago, says uSwitch.com, the independent, online switching and comparison service.

The energy giant has been forced to part with its crown following new price cuts of 16% for gas and 3% for electricity, announced today by npower. These cuts will see npower’s average annual prices drop from £1,029 to £920, making it £33 cheaper than British Gas’ standard plan. Online tariffs are emerging from the current price war as the new battleground, with prices on average being 10% (£81) cheaper than standard plans and suppliers fighting each other for pole position.

While today’s announcement is great news for the millions of households currently thinking of switching, the small print reveals that existing npower customers will be left out in the cold for at least another two months, as they will not see their prices fall until 30th April 2007. Whereas new online customers will receive the benefits of the latest price reductions, customers who sign up to npower’s dual fuel offline product will have to wait until 30th April - although anyone who switches to npower after 19th March is being offered one month’s free gas to soften the blow.

The big question regarding price cuts is no longer ‘if’, but ‘by how much?’. 2006 saw wholesale gas prices plummet by 50%, while bills continued soaring upwards by 36%, at a cost of £261 on average. npower put its prices up last year by 53% for energy bills, which equated to £358. The last time it put prices up was 1st October 2006. Today’s decrease only reduces this amount by £109 and 30%

If consumers were to see the whole of the price increases made by npower since March 2006 wiped off their bills, then npower would have had to cut its prices by 22% for gas and 16.9% for electricity. In fact it has settled for 16% and 3% respectively. This only wipes out 30% of its increases, so it is still giving consumers a raw deal.

Pressure is now mounting on the remaining four remaining Big Six providers yet to make a move. They have plenty of leeway - with dual fuel prices having gone up by £433 since the start of 2004 and the average energy bill reaching an all-time high of £1,013 in 2006.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “npower spent most of last year with its hand in the cookie jar and today it is being less than generously sharing the crumbs with its customers. All the suppliers have been withholding the benefits of falling basic costs of energy from their customers for far too long. It’s time for them all to put their customers first and pass these savings back instead of lining their shareholder’s pockets.

“Instead of indulging in this ‘tit for tat’ price war, suppliers should step up to the bar and pass back the full savings now rather than waiting for the price war to squeeze it out of them. Consumers can also start helping themselves. Suppliers are making it clear that the best deals to be had are online so consumers should dump expensive standard tariffs and move onto the most competitive online tariff as quickly as possible. If everybody on a standard tariff was to do this it would really hit suppliers where it hurts, in the pocket. uSwitch urges consumers to switch to an online tariff as they are on average 10% cheaper than standard products and savings could be as high as £208.”