Co-op cuts energy prices: will the big six follow?

Co-op will reduce gas and electricity charges for most of its 16,000 customers by an average 3% from 1 February. That's a saving of around £35 per year for the average household.

The price firms pay for their energy they sell to us, known as the wholesale price, has been falling over recent months, which has triggered the move.

Fellow energy minnow Ovo Energy axed plans to increase costs for its variable rate customers last month for the same reason.

Some commentators have called on the big six – British Gas, EDF, Eon, Npower, Scottish & Southern Energy and Scottish Power – to follow.

They have all raised prices over recent months by up to 19%, bringing misery for millions of households already hard-pressed due to soaring inflation.

'Don't expect big six to follow'

However, it's unlikely the giants will reduce prices soon as the way they buy energy is different.

Analyst firm Utilyx says the big six may have already bought most of the energy they plan to sell to us over the coming months.

In contrast, small firms often don't buy their energy so far in advance so can react much quicker to falling wholesale prices.

Paul Green, head of price comparison site Energyhelpline.com, says: "The announcement has focused attention on the fact that wholesale prices are falling and will no doubt leave many consumers wondering why, if Co-operative Energy can give a commitment to reducing household energy bills, why can't the big six?

"The call to put customers before profits resonates with what many are thinking and could be a powerful way of attracting new business."