Energy News

SSE cuts gas prices by 4.5%

Thursday 12 January, 2012

By Martin Fagan

SSE follows EDF and British Gas by cutting energy prices in the fastest succession of price changes on record.

SSE is the third of the “big six” energy suppliers to announce cuts in its energy prices in the last 24 hours.

The company - formally known as Scottish & Southern Energy - said it would cut its unit price for household gas by 4.5% from 26 March, 2012. SSE said “around 3.5 million households” in Britain will benefit from the reduction, which will cut typical gas bills by around £28 a year.

The reduction will apply to gas only. SSE will leave its electricity prices unchanged for the foreseeable future.

In the last 24 hours, EDF Energy has announced it will reduce gas prices by 5% from 7 February and British Gas reduced its electricity prices by 5% with immediate effect.

SSE announced it had also decided to extend its commitment to cap household electricity and gas prices by another two months, from August 2012 to October 2012. This means it will not implement any price increases before October 2012 at the earliest, but says it will implement more price reductions if it can.

The price fall goes some way to balance SSE’s recent price rises. In September 2011, SSE increased gas prices by 18% and increased electricity prices by 11%, although this was its first price rise since August 2008.

The move by three of the “big six” - Npower, Scottish Power and E.ON have yet to make any announcements - follows a trend set by the smaller, independent suppliers. Last week, Ovo Energy announced a 5% cut to its fixed energy prices and, last month, Co-Operative Energy announced a 3% decrease on its energy prices.

Adam Scorer, director of policy and external affairs at watchdog Consumer Focus, said: “This is the quickest succession of price changes we’ve seen and we hope this signals that suppliers are becoming more alert and responsive to market developments and to what their customers need.

“With three of the ‘big six’ announcing price cuts, the heat is now on for the other three to follow suit and help ease the pressure of high energy bills for their customers.

“The widening gap between wholesale and retail prices has become the fault line for consumer confidence. Companies want to regain the trust of their customers. Narrowing this gap is a necessary part of achieving this.”

Although SSE says it buys most of its gas months - and sometimes years - in advance, some of the gas supplied to customers from the spring onwards has been purchased since the period of lower wholesale prices began. SSE said it is passing this saving on to its customers.