Energy companies have started to reduce their rates in response to the falling oil and wholesale energy prices, with the average customer saving around £35 per year.
Npower has announced that it will cut its standard gas tariff by 5.1% from 16 February, following similar announcements from E-on, British Gas, and Scottish Power.
However, the energy companies have been criticised for not passing on greater savings, with the price of crude oil having fallen by more than 50% in recent months and wholesale energy prices having fallen by 20% since November 2014.
Wholesale energy costs account for between 40-50% of a standard energy bill, so if energy companies were to pass on these savings to their customers, bills should be falling by 8-10%, but that is not currently the case. However, energy companies do buy their energy in advance, and the full savings from declining oil prices may not have yet affected them.
Energy companies came under public scrutiny in late 2013, when most raised their bills by around 9%, ostensibly in response to oil price fluctuations.
