Price War Giving Customers Cheaper Energy Bills
For the first time in years, domestic bills for gas and electricity have fallen to less than £1,000 thanks to a price war that has broken out between some of the smallest suppliers in the UK.
At the moment, the biggest and most well-known energy suppliers, known as the ‘Big Six’ (British Gas, EDF Energy, E.On, NPower, Scottish Power and SSE), dominate around 95% of the supply market across the UK. But now customers are being encouraged to switch to smaller providers that could potentially save them hundreds of pounds a year.
In the past fortnight, two of the smallest gas and electricity providers have launched new tariffs beneath the average of a grand plus that we have come to expect.
Ovo Energy, a small Bristol-based energy supplier, launched a one-year fixed-rate deal at an average of £998, just last week. In response to this, First Utility launched its own new tariff of only £994 a year, making it the cheapest deal for both electricity and gas on the market at the moment, and promises a fixed price until summer next year.
MoneySupermarket’s Editor-in-chief, Clare Francis, said that First Utility have issued a warning shot at the Big Six, saying that small energy providers “are a force to be reckoned with”. She explained that the new tariff will be welcomed by consumers, especially those strapped for cash, and that thousands of people are expected to switch their suppliers over the next coming months as fixed-rate tariff contracts come to an end. “The launch of First Utility’s new offering is a clear indication that they are trying to tempt switchers their way,” she added.
Recent research from uSwitch suggests that customers are finally looking outside the circle of the Big Six for energy supply. In 2012, 52% of consumers said they would consider looking at alternative providers than the big names. This figure went up to 56% last year, but has steeply risen to almost three quarters of customers for this year – which all makes sense when you consider that households could potentially save themselves £200 a year by switching to cheaper suppliers.
The price comparison site’s Energy Expert, Tom Lyon, said that the new tariffs on offer provide customers with “welcome relief” and shows signs of a price war on the horizon, of which the customers can only benefit from. “Spring has spring for consumers following a winter of discontent,” he said. “By increasing confidence in lesser-known names, this will help customers to see that they have a real choice in front of them.”
Ed Kamm, First Utility’s Chief Customer Officer, said that his company was delighted to be able to offer their customers peace of mind with a variety of fixed price tariffs for one, two or three years, claiming to have a genuine commitment to helping them save on their energy bills.
“The activity at the top of the price comparison table shows that there’s active competition within the market, something we have actively encouraged,” he stated. “It will be interesting to see if the larger suppliers choose to get involved.”