Energy prices have HALVED to an all-time low but savings aren’t being passed on to customers
ENERGY prices for suppliers have nearly halved to hit an all-time low, but the savings aren't being passed on to customers.
Wholesale prices were 44 per cent lower in April compared to the same time last year, down from £43.55 to £24.18 per megawatt hour (MWh).
Yet the average standard variable tariff at the big six suppliers rose by £39.26 to £1,175.93 in the same period - an increase of 3 per cent.
Standard variable tariffs, which are rolling energy bill contracts with no fixed end, are some of the most expensive for customers.
Wholesale costs make up 38 per cent of a typical dual fuel bill, so the drop should lead to a 17.5 per cent fall in bills if all the savings were being passed on.
For the average household, this would be a saving of £16 per month or almost £200 a year if wholesale prices remained low, according to autoswitching site Switchcraft.
How to save on your energy bills
SWITCHING energy providers can sound like hassle - but fortunately it's pretty straight forward to change supplier - and save lots of cash.
Shop around - If you're on an SVT deal you are likely throwing away more than £300 a year. Use a comparion site such as MoneySuperMarket.com, uSwitch or EnergyHelpline.com to see what deals are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount usually for 12 months.
2. Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information - which you can find on your bill - to hand to give the new supplier.
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
Yet some of the tariffs from the big six suppliers and Bulb have actually increased in price recently.
On March 2, Bulb reduced gas prices but electricity prices went up by £22 a year.
In contrast to variable rates, the best fixed tariffs are currently 12 per cent cheaper than last year.
They offer savings of over £250 a year for an average customer who switches.
Wholesale prices of energy have fallen due to a drop in travel following coronavirus, after diving at the end of last year due to mild weather.
If the low prices remain, Ofgem will in August announce a reduction in the price cap to then come into effect in October, it told The Sun.
The price cap is updated twice a year so that it reflects the underlying costs of supplying energy - but this is often hundreds of pounds more expensive than the cheapest tariff on the market.
It's still worth finding out if switching supplier can help you find a cheaper deal now.
What to do if you can't pay your bills
FALLING behind on your energy bills can be extremely stressful.
If you’re struggling to pay what you owe, contact your supplier as soon as possible.
Your provider has to help you come up with a solution, and you should be able to negotiate a deal that works for you both.
One option is to agree a payment plan where you pay off your debts in affordable instalments.
You may be able to pay off your debts directly from your benefits through the Fuel Direct Scheme.
A fixed amount will automatically be taken to cover what you owe plus your usage.
To be eligible, you must be getting one of the following benefits:
- Income-based jobseeker’s allowance
- Income support
- income-related employment and support allowance
- Pension credit
- Universal Credit (but only if you’re not working)
If you cannot come to an agreement with your supplier, they may try to force you to get a prepayment meter installed.
In very rare cases, where you refuse to negotiate, your supplier might threaten you with .
Andrew Long, Switchcraft’s founder, said: "Suppliers should use their variable tariffs as designed and pass on savings from lower wholesale prices to consumers.
"That said, we cannot rely on the big six to cut their own profit margins.
"Everyone should check now whether they can save by switching to a new, fixed energy deal.
"Wholesale prices are at their lowest point in years so the time to shop around is now."
While Will Owen, energy expert at comparison site Uswitch, told The Sun: "Lockdown has pushed wholesale gas prices to their lowest levels for 21 years, but many consumers may be looking at their energy bills and wondering why they haven’t enjoyed a similar fall.
“Most energy providers buy their power for standard variable tariffs years in advance, meaning that short-term drops in the wholesale price have little effect on these deals.
“The energy for fixed tariffs is bought nearer the time, meaning these deals are more responsive to changes in the wholesale prices and making them much better value for consumers.
"Current fixed tariffs are the cheapest they have been since 2018, with 12-month deals available for as little as £782.15, so now is a great time to get off your supplier’s SVT."
A spokesperson for trade body Energy UK told The Sun: "Suppliers purchase energy in different ways - some buy in the short term meaning they can react quickly to changes in wholesale price, but others buy much further ahead to protect against sharp increases when prices go up.
"Energy companies have committed to providing additional help during this ongoing crisis, including to any customers facing problems paying their bills due to the coronavirus situation."
A spokesperson for Bulb said: “Bulb is committed to transparency and fairness whilst helping people lower their energy bills and carbon emissions.
"We dropped prices for over a million customers in March this year, and we offer a single tariff with no loyalty tax so that customers know they are always getting the lowest prices.
"The long term picture is very uncertain and some of the factors causing prices to fall now may push them up later in the year, so we’re not planning any further changes to our prices right now.
"But when there are savings to be made we pass them on to everyone: every three months, if Bulb’s costs have fallen by more than £20 per year, so will tariffs."
The Sun has also contacted the big six suppliers - British Gas, EDF Energy, E.ON, nPower, Ovo Energy and Scottish Power - for comment.
Ovo Energy bought SSE in December last year, meaning it's now among the big six energy providers in the UK.
It told The Sun it reduced the standard variable tariff for Ovo and SSE customers in April in line with the latest price cap.
SSE recently also reduced its one-year and two-year fixed tariffs, while Ovo Energy said it plans to do the same ”in the near future”.
A spokesperson for EDF Energy said: "We buy the energy for our standard variable tariffs across the same period that Ofgem’s uses to calculate the level of the price cap, so the energy standard variable customers are using now was bought at a higher price between July 2019 and January 2020.
"We expect the lower wholesale costs seen in the past few months will be factored into the new tariff cap level which Ofgem will announce in August 2020.
"We offer our customers a range of competitive tariffs and actively encourage them, through regular communications, to review which tariff they’re on."
British Gas declined to comment.
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