Supplier announces gas price cuts
Another of the UK's Big Six energy suppliers has announced a cut in its gas prices in a move benefiting about 1.3 million customers.
Npower, which is part of German utility company RWE, said its average tariff will come down by 5.1% from February 16, making it the largest percentage price cut in the recent wave of announcements from the sector.
British Gas is cutting prices by 5% from February 27, Scottish Power by 4.8% from February 20 and E.ON has taken 3.5% from bills with immediate effect.
The npower reduction means that on average the company's annual standard domestic gas tariff is now £667 per year, down from £702.
The industry-wide reduction in bills reflects the falling cost of energy on wholesale markets, although companies have come under fire for being too slow in passing on the savings.
Recent figures from industry regulator Ofgem show that wholesale gas prices are down 19% on last winter.
RWE npower chief executive Paul Massara said: " Today's announcement means we can get the benefits we are seeing in the wholesale market to our customers pockets as soon as possible.
"We have balanced this wholesale price fall against increases in the other costs we are charged. If there are further falls in wholesale prices, we will keep these under review to see if we can cut further."
SSE and EDF are the remaining two companies out of the Big Six still to announce price cuts.
Energy Secretary Ed Davey said: " Competition is driving down prices and it's consumers that will benefit. There's now even more pressure on the remaining energy companies to follow suit and cut their prices."
Martin Lewis, founder of independent consumer website moneysavingexpert.com, said he was concerned that the recent price cuts will give people a false confidence that they are on a good deal.
He pointed out that Npower's standard price for someone on typical usage was now £1,169 per year but the market's cheapest deals are about £915 a year on the same usage.
Mr Lewis added: "With the wholesale price of energy having come down by about 20%-30% since the start of 2014, and the prices of the cheapest switchers' deals having dropped more than 10%, these cuts are trivial.
"The urgent warning is for everyone to do a comparison to check if they're overpaying and which their cheapest is."
The gas price cuts have thrown the energy sector back into the spotlight four months ahead of the general election.
The firms have fallen short of industry estimates suggesting that bills could fall by £136 a year if suppliers were to pass on the full drop in wholesale prices.
Industry experts believe the companies may be reluctant to make deeper cuts for fear they will be locked into them should Labour win the election and cap prices.
The latest announcements come two weeks after Chancellor George Osborne launched an investigation into whether key sectors such as energy firms were passing on the costs of falling wholesale prices to consumers.
Labour proposed giving Ofgem new powers to force suppliers to do so.
The sector is also in the midst of an in-depth investigation by the Competition and Markets Authority which could result in bigger players such as British Gas being broken up.
Ofgem chief executive Dermot Nolan said the price cuts were a step in the right direction but added that many customers could be better off by up to £250 by moving from a variable rate to a fixed-rate deal.
He added: "We are seeing companies compete for consumers interested in taking a fixed-price deal. However, we are not seeing rigorous competition between suppliers that benefits all consumers.
"Around 60% of customers are on variable tariffs, and the lack of competitive pressure on prices for these customers is another reason why the Competition and Markets Authority is investigating this market.
"In the meantime, I would like as many consumers as possible to look for a better deal, as it's never been easier to shop around for their energy."