Not one to join the party late, British Gas is the third major energy supplier to react to the drop in wholesale gas prices by passing on these cuts to their customers. In what is becoming a public fight over rate changes, British Gas have decided to cut consumer costs by 5%.
Compared to the 3.5% announced first by E.ON and the 4.8% cut announced by Scottish Power; this looks to be a battle for public relations that seems to be benefitting the customers.
Yet whilst this savings grandstanding may look good from a publicity perspective, considering the 28% drop in gas prices and 15% drop in electricity prices, these 3-5% savings being passed on are really not enough. Of course these companies are not obliged to pass on these savings, but many have looked to the government to find more fair energy pricing.
Ed Miliband has said he will give energy regulators more power to enforce tariff costs cuts if he were to win the coming election. Considering this and the other proposed energy regulation controls, these passed on savings could be seen as an attempt to placate an increasingly intolerant public, who are gaining a better understanding of energy costs and where they come from.
With this knowledge of price drops and likely further drops, big energy companies may have no choice but to continue to drop prices, or face Ofgem regulatory control.
Whether the trend will continue to the other major energy suppliers is still to be seen, but a large scale consumer cost drop would be welcomed by all (except the energy companies). Now that the public have heard Miliband’s promise, it seems the ‘Big Six’ will have very little choice.