Householders who have their gas supplied by EDF Energy will see their bills fall by 5% from February.
The supplier has become the first of the "big six" energy firms to lower gas prices in a move that will come into effect on 7 February. It will result in a dual fuel bill of £1,137 for a typical EDF customer paying by direct debit, compared to £1,218 on British Gas's equivalent tariff.
The supplier said its price cut was in response to declining wholesale prices, which have fallen by about 9% since the company put prices up at the beginning of November 2011.
"We know customers are finding it difficult, particularly during winter. So I am pleased we have been able to make this announcement now and help our customers at a time they use more gas," said Martin Lawrence, managing director of energy sourcing and customer supply at EDF.
In November the company put up its gas prices by 15.4% and electricity prices by 4.5%. This compared to price rises by British Gas in August 2011 of 18% for gas and 16% for electricity, and similar moves by all the other major suppliers.
But EDF electricity prices will not come down next month. A spokesman for the company said this was because customers had already been protected against the full rise in wholesale electricity prices in November. This had gone up by 14% between March and September 2011, he said, but the EDF increase had only been 4.5%.
Which? executive director Richard Lloyd welcomed the EDF cut, but added: "Now the pressure is on for the rest of the major suppliers to follow suit."
It is widely anticipated the remainder of the big six firms will announce similar price cuts shortly.
On 6 January small energy supplier Ovo announced it was cutting its gas and electricity prices by 5%. It said the average UK household on its New Energy fixed tariff would face a bill of £1,061 a year.
Recently, price comparison website Energyhelpline predicted cuts of up to 10% were "just around the corner". Director Mark Todd said: "This would mean the average annual dual fuel bill falling by as much as £135."
Any price cuts, however, will do little to appease customers faced with energy suppliers' notoriously bad customer service. More than 4 million customers made complaints to the big six suppliers in 2011, according to a recent report by Which?, with mistakes on bills and inaccurate meter readings causing the most hassle.
In October, energy regulator Ofgem proposed a "radical reform" of the energy market and simpler tariffs, as it revealed utility companies had increased their profit per dual-fuel customer by 733% – from £15 to £125 - from June to October 2011.
British Gas then announced it would simplify its tariffs in a bid to gain customer trust, but the move has meant they will pay more for its cheapest deals.
Comments
Sign in to comment or to join the conversation
11 January 2012 10:16AM
Same old story. Price goes down far less than it went up and after the heaviest quarter is over at that. Stay tuned for next winter.
11 January 2012 10:20AM
The Guardian are quite good with their data blogs. May I suggest the following: create and display a simple database, preferably with graphics, showing how much the prices of electricity and gas have increased since, say, 1 Jan 2000. Use this date as the 100 date and index everything from there. Present the data for all suppliers in the UK. Make it possible to graph the increase of wholesale gas alongside this, just the get an idea of how much the premium has grown over time. Also show us the evolution of profit margins earned by and, if possible, government subsidy to support each of the suppliers.
Now THAT would be useful.
11 January 2012 10:21AM
Lets hope this is a the start of realistic and honest pricing from the energy firms.
I remember when the wholesale prices went down before they came up with all manner of reasons and excuses why they couldn`t pass on the reductions to their cutstomers
11 January 2012 10:29AM
So their costs fall by 9% so they reduce their prices by 5 % - seems like a very nice little earner to me.
When are the pathetic *******s at OFGEM ever going to get their act together and properly investigate and act upon this cosy little cartel ??
11 January 2012 10:34AM
To be fair, it is not a huge surprise that gas prices go up as winter approaches and come down again with the onset of spring. Supply and demand and all that.
I guess the reason the customer price has come back down less (5.9%) than the wholesale price reflects the fact that the gas procurement costs only form part of their costs, the remainder of which haven't changed (e.g. manpower, maintenance, admin, marketing costs etc).
However it would be useful to get some insight into how much wholesale prices increased to force them to put their prices put their prices up by 15%, to get an idea if we are being screwed. I can't find any reference to the wholesale price increase which coincided with the 15% rise.
11 January 2012 10:41AM
Scottish Power are the worst.
They said their prices were going up by 19% but in my latest bill for the autumn they increased the price per kilowatt hour for electricity by 50% compared with the same quarter the previous year and 89% for gas. 89%!!!!
I was totally and utterly outraged, as anyone would be. And when I phoned them, first of all they tried to pretend there hadn't been a big increase and then told me it was my fault for not checking letter they sent me during the summer outlining their price increases and that while 19% was an average, in "some areas" the increase could be more. i.e. they had decided to target certain areas to milk as much money as they could.
So I switched to Ebico, who are supposedly offering exactly the same prices as Scottish Power were a year ago. We shall see.
If you are a Scottish Power customer, watch out!
11 January 2012 10:42AM
My current Coop Gas price is 3.75 pence per unit including VAT. The Coop charges
£5.25 per month in service charges.
Writing an article, more correctly a McKinseyish sequence of seemingly independent sentences, about the price of gas without mentioning the bloody price has to constitute some kind of record. It's the McGuffin as Hitchcock would say. Trust the Guardian, pushing the boundaries of journalism.
11 January 2012 10:46AM
Here is the graph of a fund which roughly tracks the wholesale price of natural gas. You may be surprised:
http://www.iii.co.uk/investment/detail?type=chart&display=chart&code=cotn%3ANGSP.L&it=letf&timeframe=3y2&index=&versus=&linetype=candle&Go=Plot+&overlay=&overlay2=&overlay3=&overlay4=&indicator=&indicator2=&indicator3=&indicator4=&chartwidth=976&buylines=on&triggers=on
11 January 2012 10:48AM
@Trilobyte
I asked EDF about that (the gas wholesale price rise) and they say it went up 18% between March and September last year (the period between their price announcements).
I'm just writing up a Q&A on what to do now: should you switch, who has the cheapest deal etc etc so if anyone has any burning consumer-related (ie I'm not getting into explaining relationship between retail prices and costs to supplier etc!) queries let me know and I'll try to incorporate them, time permitting.
11 January 2012 11:01AM
Could we also include the wholesale prices of gas and electricty in this graph?
11 January 2012 11:03AM
*gas and oil, sorry.
11 January 2012 11:17AM
"EDF Energy cuts gas bills by 5%"
Great ! Not being ripped off any longer.
Luverly Jubberly.
Style of thing
11 January 2012 11:19AM
Ranelaugh75.
try
http://www.indexmundi.com/commodities/?commodity=natural-gas&months=120¤cy=gbp
You may be surprised and very angry! especially if you take inflation into account. Don't forget that the EDF fellow said that the actual price of the commodity is only 50%, the rest is tax, administration etc.
rgds
11 January 2012 11:26AM
Be sensible, "realistic and honest," do me a favour did you read this bit : utility companies had increased their profit per dual-fuel customer by 733% from 15 to 125 pounds- from June to October 2011.
I admire your optimism but have none myself.
11 January 2012 11:32AM
Global warming. The poor must die so the rest of us can survive.
11 January 2012 11:35AM
Dont these companies always say that utility prices are heavily linked to oil prices .My local petrol was stuck on 1-36/litre from july to the start of december ,even though the price of oil fell nearly 15% during that period,it then fell to 1-31 in early december . Since christmas it has been going up 2p a week and now stands at a record level for round here of 1-37 and 1-38 in places. I can only deduce from that that oil prices are surging again.
So will these price drops of utility bill be short lived . Down 5% as the weather warms up and the nights are longer ,up 20% next autumn due to price of oil.
11 January 2012 11:39AM
@LisaBachelor
Would be useful to include the direct debit discounts and incentives available from switching sites (uswitch, energyhelpline etc.) and cashback sites (quidco, topcashback) in the overall price.
11 January 2012 11:47AM
To be fair, supplies were not reduced.
To be fair, it's simple profiteering.
11 January 2012 11:49AM
You may be interested in signing this ten.
Help shame the energy companies into passing the price cut on to their customers - sign the petition now:
38degrees.org
This has been active for just a few days and has over 60,000 signatories at my moment.
11 January 2012 11:50AM
I look at these articles and think - so what?
A piece telling me someone's reduced their prices by x% means nothing really - other than the fact that their prices are slightly different than they were.
Without reference to a baseline and a comparison it's not providing anything of value.
Hopefully the piece Lisa Bachelor mentions in her reply will provide the sorts of insight which consumers need, but the challenge is around the confusion-pricing that the energy companies and their marketing departments intentionally create.
11 January 2012 11:53AM
My theory is that they've dropped the price after realising that their not going to make any money out of us this Winter anyway - as it's been so mild. Of course there's a cold snap on the way now, and we've still got February to go, so perhaps we'll have the last laugh!
In the old days - before "The Middle Man" was King - the behaviour of the utility companies would have been called "Profiteering". Funny old World eh?
11 January 2012 12:03PM
Oh, and some soft of dynamic slidey thing where you can select/unselect discounts, exit fees etc and come up with an overall monthly/yearly price and allow you to adjust for seasons/how much you want to pay would be super useful. Though you may not have the budget and time to do it :)
11 January 2012 12:11PM
@mazzam
I've filed the piece now but that's an interesting point and worth people checking. I've mentioned in the piece that people should check more than one price comparison site before switching as I've found not all results are the same. Also, from what I recall, not all include Ebico, who I have found in the past to be the cheapest. They may not be as competitive now, but worth a check
Re your second suggestion: sounds amazing! If only I could produce that, I might solve most of the price confusion out there! Sadly time/resources an issue but sounds like something someone with more of both should be looking at.
11 January 2012 12:25PM
After all the rises, this is at best a token gesture.
Nationalise all utility companies now, and then move onto transport.
11 January 2012 12:35PM
A cut in prices at the end of winter which is a fraction of the amount they were raised by in the middle of the previous autumn.
It would be annoying if it wasn’t so predictable.
11 January 2012 12:38PM
Inflation is 5%? And energy bills are coming down?
No.
If you look at the figures in the inflation detail, if you want to eat, drink, drive or heat your house (now, hoorah, those heating figures are coming down as the Spring starts are less is used), then inflation in the UK are the moment is 17.5%.
If you want to buy electronics or white goods, prices are down 1% - 30%.
Thank God I eat fridges, drink TVs and drive a toaster ...
11 January 2012 12:46PM
Let's face it, 5% reduction is a sop, pure and simple, it enables EDF to say "We cut our prices as soon as we could" yet leaves their bottom line largely untouched.
I agree with RedAdder, let OFGEM do something to stop this ripoff by the energy cartel in this country.
11 January 2012 1:05PM
Sorry EDF - you need to get up very early in the morning to fool me. There will be no street parties in my location any day soon !!
What I would really like to know; when are our useless energy regulators going to give the EDF and the rest off the, rip-off energy ilk, something to really think about?
I'm sorry and this is a personal view point, I think the energy companies are a bunch of crooks - bas--rd crooks !!!
11 January 2012 1:14PM
So that'a a 10% increase then?
11 January 2012 1:15PM
EDF.
It stands for Energy Defence Fund.
They'll go to any length to defend their profits.
11 January 2012 1:24PM
Cutting which tariff from what rate to which rate. Percentages mean nothing when they operate so many different price structures.
Switching sites list EDF alone with 20 tariffs for fixed monthly direct debits and a different 20 to pay on receipt of the bill. An existing customer might be on any one of more than 40 rates including other variants on variable direct debit, standing order or prepayment.
@Ranelagh75
Problem is the power utilities operate confusion pricing. Prices are only valid for one supply area, invariably highest in their traditional homeland. 'Deals' are introduced at regular intervals to trap those not keeping up with the constantly changing tariffs. All serves to rip off those not swapping on a regular basis and wary of being trapped into a fixed term deal, many of whom elderly and not used to the underhand tactics.
The best move Ofgem could make is to mandate a single price quote from each company. Standing charge and pence per unit, 3 months notice of any change, no penalty or admin charge to swap.
11 January 2012 1:51PM
I can't see why gas and electricity isn't in public hands. There seems to be no benefit to he consumer from these private companies buying gas/electricity and flogging it to consumers at ever increasing pricess. I appreciate there's a global dimension to pricing but surely if it were state owned any profits would be to the benefit of the taxpayer. The much hyped benefits of competition simply haven't worked for utilities or indeed for the railways.
Of course I appreciate there should be limites on the amount of nationalised business and that generally free enterprise brings innovation and rewards success. But in this case we're talking about companies just buying and selling on via an established network (even British Gas has to have seperate arms for its manufacture and supply businesses).
I expect Cameron is thinking the same thing and expect his policy announcement to this effect later this week.
11 January 2012 1:59PM
I haven't had my heating on at all so far. I put loads of clothes on instead. Not because I can't afford it. No, not that. It's because I want to piss EDF off. It won't of course but you know what I mean.
11 January 2012 2:12PM
Why not instigate a semi rigid policy where the consumer unit price is tied to the wholesale unit price plus a fixed margin, say 20%.
That way, company profits would be resolved purely the least amount of money they spent out of their 20% gross margin.
The best could achieve very strong returns by reducing their own costs/ bureaucracy combined with their canniness in purchasing wholesale at the most opportune moments - all would have the same 'gross' margin, but the 'leanest' company (ie, lowest paid chief exec and least middle management) with acceptable customer service would have the greatest net margin - and the countries consumers would flock to them so they would have a higher volume of customers (and thus profit) as well.
Seems a very fair way of doing things - we all know where we stand.
11 January 2012 2:15PM
oh and @LisaBachelor - all comparison sites do include Ebico, but as you can't switch via any of them, you have to click the button to "show prices for firms that you can't switch directly via us" - usually not the default option.
Also, as Ebico don't 2 tier price (ie much higher price for first XXX units then drops down) their prices are more advantageous the more energy you use - for low use customers there is no benefit, and they can even be more expensive.
11 January 2012 2:16PM
Please note this 5% reduction DOES NOT APPLY to all existing customers.
Last autumn, I was strong-armed into agreeing a new 12 month fixed price contract with EDF on the threat of price increases if I did not agree a new deal.
You happily quote Vincent de Rivaz, their Chief Executive, saying: “What customers want more than anything else is fair, clear and transparent prices.”
Could the Guardian please hold him to his word?
11 January 2012 2:26PM
So this being one of the warmest winters in history has nothing to do with this decision? My heart's bleeding for all those share-holders who haven't had a whiff of profit in nearly five years.
Another couple of winters like this, and we could see the collapse of a few utility companies, and like the trains and the banks, we, the government, will bail it all out yet again.
11 January 2012 2:27PM
Great, then when the service is poor or prices go up I can . . . well I can . . . write to my local MP.
11 January 2012 2:36PM
Unfortunately this link refers to the US Henry Hub price rather than the UK wholesale gas price, notice that prices in the States remained flat (due to shale gas supply) rather than rose as was the case in 2011.
Doesn't mean to say the privatised utilities are not making huge profits or that the market system hasn't failed (I mean really putting them in charge of insulation schemes so that customers use less gas!) but the profits more from the upstream North Sea stage rather than the domestic market
11 January 2012 2:36PM
Well whoopie. So why have they just (Tried) to double my DD to £78 even though the account is in credit ? Still robbing after all these years.....
11 January 2012 2:37PM
As opposed to what, exactly? I expect the chairmen of these private utilities companies are tied down all day answering letters from Joe Public.
11 January 2012 2:47PM
As opposed to the option to simply change providers.
11 January 2012 2:51PM
Correct. A couple of months ago, I got a new fixed price offer, with a unit price quite a bit over the current standard rate, as long as I signed up for the new deal by 31 December. Fixed price was for 2 years as I recall. Quietly pleased I did nothing and have reverted to the standard rate until I can see what's happening overall price-wise.
And yes, EDF do try to stitch you up on the monthly direct debits, seemingly assuming customer unable to multiply by 12 in their head. As in the first DD amounts suggested for both gas and electric were so divorced from the reality of what my gas and electric charges are in a year that I laughed at the rep. They climb down quickly enough if you DO know your average yearly spend.
11 January 2012 3:14PM
Ar8eholes.
Though i'm more interested in Diesel going through the bloody roof!!
Hoorah, taxes on living/working.
11 January 2012 3:23PM
I did the same. I changed to EDF last May on a single year non-fixed contract, collecting £30 cashback in the process. They were the last to raise their prices, by the lowest overall amount and are now the first to drop them, if only slightly. In May I intend to shop around again, some of the cashback amounts for switching are around £100 at the moment, so that has to be factored in too.
Even as prices were going up last year there was enough coverage of the fact that wholesale costs were declining. The suppliers stitched their customers up like kippers by persuading many of them to jump on fixed-price rates. The shock of the price rises and the implied threats from the suppliers of more to come was enough to convince many, compounded I must add by the shamefully ignorant advice of many consumer advocates (I'm looking at you Martin!). Now they are high and dry and with the recession still kicking in, demand isn't likely to spike again soon.
11 January 2012 3:46PM
Mmm, EDF energy announce before christmas (when it starts to get cold) that they are increasing their prices by 15%. Then, they announce that in February (when it starts to get warm) that they are reducing prices by 5%. Thats a profit of about 10%?
They must have bankers in charge of their finances
Well done EDF - a true shining light (no pun) in the world of affordable energy for an already cash-strapped British public
11 January 2012 3:53PM
Trickle down reporting guys.
How come we never get real wholesale prices and their historic trends?
11 January 2012 3:59PM
Oh, what, because of that massive difference in price and quality of service between all the suppliers you mean?
11 January 2012 4:04PM
Their wholesale cost of procuring gas fall by 9% - but all the other costs involved haven't changed - like transportation, distribution, metering and so on.
I've not got the numbers for gas, but in electricity the cost at "station gate" - when it leaves the generating station - is about 60-65% of the cost of a unit that the end customer pays. Transmission and Distribution is another 25%, metering about 2-3%, billing and supplier overheads about the same and about 5% suppliers margin.
That latter's an average by the way - British Gas makes about 6-7% margin, npower, EDFE and Eon are loss-making on their retail businesses.
11 January 2012 4:12PM
True, but they also don't account for the previous rise.
Really?