Scottish Power to cut gas bills by 8%

Published on Thursday 11 March 2010 12:06

ENERGY provider Scottish Power said today it would cut gas bills by an average of 8% from March 31.

• An annual single fuel gas bill will cost an average 832 with Scottish Power after the March 31 reduction

The group is the last of the "big six" energy providers to reduce its gas tariffs this year as firms respond to sharply lower wholesale energy prices.

Around 1.6 million gas customers will benefit from today's reduction.

Scottish Power, which is owned by Spanish group Iberdrola, attracted criticism recently for failing to pass on wholesale price reductions more quickly when it revealed a 7.9% rise in earnings last year.

It has not reduced standard gas prices since early last year.

Scottish Power's move will see its gas bills fall by an average of 66 a year.

But the group was the most expensive standard payment gas provider before the latest round of cuts and remains the dearest despite today's announcement, according to independent consumer watchdog Consumer Focus.

An annual single fuel gas bill will cost an average 832 with Scottish Power after the March 31 reduction against 735 with E.ON, which will become the cheapest after its bill change.

Raymond Jack, Scottish Power's director of energy retail, said while wholesale costs had been falling, less than 60% of a customer's bill was now based on wholesale costs, with the remainder covering expenses for "investment, government obligations and the delivery of energy to the home".

He added: "The gas we are using today was bought well in advance when prices were much higher.

"It is important that we do this to ensure we have sufficient supplies when customers require them and to protect customers from volatile spot market prices."

Scottish Power is also offering a 50 winter rebate to help its most vulnerable electricity customers, which will be credited to their account by March 31.

However, while this year's price drops may be welcome news for gas customers, they come too late to help ease the cost of heating bills during one of the coldest Januarys on record.

There have also been no reductions for standard electricity bills, except for discounts offered by a number of providers to those paying by monthly direct debit.

Consumer Focus said it was disappointed that electricity had not come down in price.

It also hit out at an apparent "pack mentality" between the providers to cut by similar amounts and within days of each other.

Audrey Gallacher, energy expert at Consumer Focus, said: "The energy market should be offering Premiership levels of competition – unfortunately it is kicking around in the lowest levels of Sunday League.

"Any hope is now gone of the genuine price war this market needs so badly.

"The shouts for an independent investigation by the Competition Commission should now be deafening."

The difference between payment types has likewise come to the fore over the past few weeks as providers have disclosed vastly varying prices.

Scottish Power today said households could make further savings by changing the way they pay to direct debit and managing their accounts online.

Monthly direct debit payment plans see households pay a flat rate every month throughout the year, which is reviewed periodically to check cost against usage.

It has become a controversial method of payment, with concerns sparking an inquiry by Ofgem last year.

Ofgem found no evidence of deliberate attempts by suppliers to increase cashflow by using the system, nor of systematic errors.

But it did conclude that processes for setting direct debit charges resulted in large variations in payment levels and found a lack of transparency and poor communication from suppliers.