Wholesale energy costs are at their lowest for five years, and energy firms are under increasing pressure to slash bills. But don't wait for what's likely to be a trivial price cut – many can save £300/year by switching to a cheaper tariff now.

According to a new report by energy analysts ICIS, a mild winter and lower commodity prices have helped drive down wholesale costs – gas prices fell by 34% in 2015 to a six-year low, and electricity prices dropped 23% to a five-year low.

Wholesale energy costs are what firms pay for the energy they sell to us. Given these costs account for 42% of a standard dual fuel bill, energy firms are now facing pressure to cut the cost of tariffs.

Earlier this week the Prime Minister and energy secretary Amber Rudd said they would like to see energy prices come down to reflect the fall in wholesale costs.

Yet even a 5% cut in energy prices would only shave around £50/year off bills for a typical user with one of the big six firms, while many can save £300/year now by switching to a cheaper deal.

Around 70% of people are currently on a big six standard tariff, with an average cost of £1,095/year – the cheapest tariffs on the market are an average £790/year for a typical user. Do a comparison now at Cheap Energy Club to find the cheapest tariff for your area and usage.

'Don't sit back and wait for a price cut'

Archna Luthra, head of clubs at MoneySavingExpert.com, says: "Pressure is mounting on suppliers to pass on the savings they are making to consumers, but we are yet to hear a peep from them. Wholesale prices – which make up nearly half of bills – dropped by over 20% last year so price cuts are long overdue.

"However any cuts are likely to be paltry compared with what people can save if they do a comparison right now. There is £300/year difference between the cheapest and most expensive tariffs; 5% price cuts would only shave £50 or so off bills. So everyone should be checking and switching now – don't sit back and wait for a price cut."

Energy firms' costs hit five-year low – but don't wait for cuts to bills
Energy firms' costs hit five-year low – but don't wait for cuts to bills