SSE has become the second big six energy firm to reveal price cuts this year, but it's only dropping gas prices by 5.3%, and only from 29 March. Even after that small decrease, the company's standard tariff will cost on average almost £300/yr more than the cheapest.
Today's announcement from the big six supplier, which has more than eight million customers, follows its rival E.on's similar move last week when it revealed it would cut gas prices on its standard tariff by a paltry 5.1% from 1 February.
However, with many able to save far more by switching now to a cheaper deal, use our free Cheap Energy Club to find the cheapest tariff for you.
As with E.on, the price cut – which is for gas only, not electricity – will apply to those on SSE's standard tariffs, including prepay customers. But if you're already on one of its fixed tariffs, you won't see a price cut unless you switch tariff.
SSE says the reduction will save a typical gas customer on its standard tariffs an average £32 per year compared with current prices, for credit and prepay customers. It won't say how many of its 8.28 million customers will benefit from the cut announced today though.
After 29 March a typical user's SSE dual fuel direct debit bill on its standard tariff will be an average £1,068 a year; yet the cheapest deals on the market cost about £770 per year.
'Don't celebrate, ditch and switch'
Martin Lewis, founder of MoneySavingExpert and Cheap Energy Club, says: “Baaaah. SSE has bleated and followed E.on’s price cut last week, the rest of the big six sheep will likely soon follow.
"And again it’s just a trivial 5% on gas only, not electricity – nothing close to the drop in wholesale prices. Energy firms must be whooping for joy that they can get away with such small cuts and have the energy minister praising them, albeit slightly.
"The real picture here is that even after cuts the vast majority of households in the UK are massively overpaying for their energy. E.on and SSE customers with typical usage on their standard tariffs will be paying at least £1,050 after the cuts, and those from other firms even more.
"Yet the market’s cheapest tariffs for switchers are about £770/year on the same usage. And indeed both E.on and SSE offer these for those who bother to switch. So the message is quite simple: you’re being ripped off. Don’t wait, don’t think ‘hurrah, prices are dropping’ do a cheap energy comparison and ditch and switch now."
Government pressure to cut prices
Today's price cut announcement comes amid intense pressure on energy firms to cut their bills, with the Prime Minister earlier this month calling for a price cut to reflect the fact that wholesale energy costs are at their lowest for five years.
Secretary of State for Energy and Climate Change Amber Rudd says: “My top priority is to keep bills down for hard-working families and businesses. I’m absolutely clear that the market must provide a fair deal for consumers and that’s why I’ve been pressing energy companies to put their customers first and pass on savings to them.
"SSE has taken a step in the right direction and I urge other suppliers to follow suit. The Government is also taking action to keep bills low by making it easier and quicker to switch, rolling out smart meters to every home and business, and increasing competition in the energy market."
'A move in the right direction'
Ofgem's chief executive Dermot Nolan says: "This is a move in the right direction, but if the market is as competitive as suppliers claim we would expect to see further price cuts. Ofgem referred the market to the CMA [Competition and Markets Authority] because we feel competition is not bearing down fast or hard enough on consumers' bills."
The CMA is currently investigating competition within energy markets after Ofgem reported the entire sector in June 2014 over concerns about the way it was operating. The CMA's provisional decision on possible remedies, due to be published at the end of January, is now expected in March.