Energy firms slash prices... but almost half the nation still can't afford bills

Four of the UK’s leading energy suppliers have recently announced plans to slash their prices by up to 5%. Whilst this offers some comfort to millions of households, nearly half the population still cannot afford to pay their bills.

British Gas, EDF Energy, Npower and SSE all announced a wave of price cuts at the beginning of the month, reducing the annual dual fuel bill by between £20 and £40.

British Gas slashed the price of their domestic electricity by 5% with immediate effect. EDF energy announced a cut of their gas prices by 5%, beginning on 7th February.

Npower also cut their gas prices by 5% and SSE slashed their gas rates by 4.5%, these changes will come into force on 1st February and 26th March respectively.

The reason behind this domino effect of crashing prices is that the wholesale cost of gas has fallen to just 9.2%.

Now only two leading suppliers remain, both of whom are likely to be feeling the pressure to reduce their rates as well.

However, the price cuts offer little relief to consumers who were hit hard by a staggering 20% average price increase across the board in prices last autumn. This added an average of £200 to the annual dual fuel bill, creating increased pressure of household debt.

Not only did this have a drastic impact on household bills, but the increased rates also drove inflation to its peak of 5.2% in September.

Whilst suppliers have inched away from their extortionate price hikes, this does little to bring New Year cheer to several households that are already struggling.

Research from the Citizens Advice Bureau CAB found that a massive 43% of the country is worried about being able to pay their next energy bill. One in two say that energy bills will put a strain on their finances this year, regardless of the small price cut.

"We know that a lot of households are struggling to cope with the rising energy cost,” commented Christ Huhne, Energy and Climate Change Secretary.

“Many people could cut their gas and electricity bills by moving to a better deal with their existing supplier, switching to another supplier altogether, or by taking up home insulation offers.”

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2012-01-17 15:58:54 © Moneyextra.com