Which Gas Suppliers Have Really Lowered Prices?

Consumers and reporters have been equally confused by the many changes in the energy market, which are less significant than you've been led to believe.

It's been a busy start to the year in gas and electricity. There's been a lot of confusion caused by price fluctuations, and because of tariffs being removed and then added again. Largely, the effects of the changes have been exaggerated. To cut through the confusion, here's a summary of changes over the past few months. Some of them are more noteworthy than others. (Take careful note of whether the changes affect new or existing customers.)

EDF Energy

Changes affecting new and existing customers
EDF has not yet announced an across the board reduction of prices.

Changes affecting new customers only
EDF reintroduced its cheapest tariff, the Online Energy tariff, but in the Southern region only. It's effective from 5 January. In Three Gas Companies Lower Prices I reported it was reasonably competitive, but it's already becoming less so after movement from competitors.

Powergen

Changes affecting new and existing customers
No changes that affect both new and existing customers.

Changes affecting new customers only
A couple of weeks ago there were rumours flying around that Powergen had reduced prices, but, really, the most significant change was that this year it had reinstated its Winter Warm tariff after dropping it for a few weeks (see Energy News: Powergen new Winter Warm discount tariff). This made it seem like it had lowered prices, when in reality the reinstated tariff was slightly more expensive!

Powergen also introduced new tariffs, effective from 15 February, that are guaranteed to beat British Gas's standard tariff until September 2008. Ignore this guarantee. It means nothing, as BG's standard tariff is its most expensive one, which is rarely competitive.

However, Powergen has from 15 February increased the discount on its cheapest tariff, Energy Online Extra Saver, by about 4%. The average discount available on these tariffs rises to 18% for electricity-only customers and 21% for dual-fuel customers. The additional discount is guaranteed until 31 July 2008, although that's a bit of a gimmicky guarantee. Powergen can increase the basic cost of its energy from which the discount is deducted: if they raise average gas and electricity prices to £2,000, it'll still cost £1,580.

npower

Changes affecting new and existing customers
Gas prices are coming down 16% across the board, but not until 30 April, which means it'll have been about a year before you will have seen any benefits from lower wholesale prices. Average electricity bills will come down on the same date by a paltry 3%.

npower introduced its very newsworthy Wholesale Tracker tariff. This means that anyone who switches to this tariff should see the effects of drops in wholesale prices more quickly. However, I am sceptical. What concerns me is that other types of variable tariffs will (hopefully!) eventually drop because of wholesale price falls last year. Thing is, this tracker tariff was pegged from 1 January, which means you'll miss out on last year's falls. Therefore, the starting cost will be roughly 20% higher than it should be.

Changes affecting new customers only

Cynically, npower quietly got rid of the cheaper version of its Sign Online tariff at the end of autumn for most of the winter, when we use the most gas. It reinstated it on 31 January. This has largely been reported as a reduction in prices, which I think is possibly a slightly generous way to describe it. However, with the true reduction in prices (of 16%/3%), this tariff is often coming up top or near top in many comparisons.

EBICo

There has been no news from EBICo for some months. Read about them here: An Energy Tariff For The Rich And Poor.

British Gas

Changes affecting new and existing customers
British Gas is lowering the cost of its tariffs from 12 March. This month it announced that the reductions would be 17% for gas and 11% for electricity.

However, for about 30,000 people on BG's Click Energy tariff the price just went up on 8 January, which will counter some of the upcoming reductions. British Gas tells me that this increase was delayed from 4 September, so they would no doubt argue that these customers have saved money.

Scottish & Southern Energy
(The company behind the Atlantic Electric and Gas, Southern Electric, Scottish-Hydro and SWALEC supplier brands.)

Changes affecting new and existing customers
From 16 January, prices are ever-so-slightly lower to people who pay promptly. See Three Gas Companies Lower Prices.

This group has said it is going to lower prices soon, and before British Gas. As with British Gas and the rest, though, it's deceptive. Its Atlantic Electric and Gas, Southern Electric, Scottish-Hydro and SWALEC brands all increased gas prices by 12.2% and an average 9.4% for electricity on 1 January. Although wholesale prices have been falling, this late increase cynically brought in extra revenue whilst people were using more gas for winter. Any decrease in price over the next month or two will probably do little more than make up for this increase.

What does all this mean?

British Gas and npower have made the most significant changes so far. I expect that the rest will follow suit with price drops in the same period: from March to April. However, as most energy companies effectively raised prices in winter and are now lowering them again, we still won't see any substantial savings from the wholesale price drops over summer.

Therefore, if you switched in winter, you may want to switch again around March or April. If you switched in autumn, you may find that this round of changes doesn't make much of an impact, because prices will have gone up and then back down again. If you haven't switched for longer than this, you should take a look at prices again now, or wait till March if you want to see how the rest of the competition will respond.

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