Many households could benefit from cut in energy prices

Over the past year many households in the UK have seen their finances take a battering for one reason or another. One of the things that has really impacted on household finances is the rising cost of energy, which soared twice last year.

Energy firms stated that because the cost of wholesale energy had increased they would have to put up the price of gas and electricity usage, and customers found their bills soaring last year after the big six energy giants hiked up prices twice, once at the start of last year and again later on in the year.

For many the massive hikes in energy prices resulted in households being pushed into fuel poverty, where 10 percent or more of the total household income was being spent on paying energy bills. With high petrol prices, soaring borrowing costs, and rocketing food prices also impacting on household finances these energy price hikes meant bad news for consumers, leaving many struggling to keep on top of a variety of repayments and leading to increased defaults on debts and mortgage repayments.

Fortunately, over recent months petrol prices and food prices have started to come down, and the base interest rate has plummeted, reducing mortgage repayment costs for many people. It now seems that many households could also see the cost of their energy usage come down, as some energy firms have announced that they are reducing their gas and electricity usage prices, which could mean further savings for households that have spent the last year struggling financially.

In fact, a couple of energy giants, including British Gas, have apparently already cut their energy prices with the price cuts having already taken effect or due to take effect very soon, according to reports. Officials from British Gas have said that its price cut, which comes to around 10 percent, will result in the average household bill being around £84 a year cheaper, which whilst not a huge amount could still help some households.

However, some industry experts have said that the energy price cuts are too little and have come too late to be of any real benefit to households. Some have even suggested that whilst further price cuts amongst energy giants are expected over the course of this year they may actually fail to materialise because of the cost of wholesale energy.

The big six energy firms have been under pressure from government and industry professionals from some time to lower energy prices, particularly given that the price of crude oil dropped sharply in the latter part of last year having soared in the summer.

Phil Bentley, the Managing Director of British Gas, said that he was aware of the impact that high energy prices had been having on customer finances, and that the company was committed to helping struggling consumers. He said: “We are committed to providing the best possible prices for customers. This price cut will go some way to helping customers manage their budgets, and we will continue to do what we can, when we can.”