Price cuts fall short

by Jan 16, 2012 No Comments

Clearly, after the price-cutting moves by EDF, British Gas and Scottish and Southern, a domino effect is in motion as the ‘Big Six’ try to protect their margins and market share.

However, these reductions, averaging 2-3 per cent off dual fuel bills, are tiny in comparison with the 20 per cent-plus price rises of the last 18 months. The price drops are less than analysts expected and much less than what consumers need.

We believe there is room for price cuts of around 10 per cent because of the recent dramatic falls in wholesale prices. Even though these falls have been around 30 per cent since the summer peak, clearly the major suppliers do not feel they can go any further than 4-5 per cent off one fuel.

This may be because they are worried about their profits but also because they genuinely think that wholesale prices could go back up and that investment in ‘green’ energies is limiting their room for manoeuvre.

Mark Todd

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