Someone pass me the history books: this is a momentous day. An energy company has just cut the cost of fuel for its customers. Ovo has announced it will cut its duel fuel prices by 5%, effective immediately.
So what's going on, and what can we expect to happen next?
The cutThe energy company announced the changes, which will come into effect today. It said that the price of wholesale energy was falling, and it was simply passing along the cuts. In order to take advantage you will need to be a new customer, or an existing one renewing your deal.
Scott Byrom, energy manager at MoneySupermarket, said:"The move sees OVO cut £56 a year from the average bill, which now stands at £1,059 meaning this is the cheapest fixed product available on the market."
It is the first energy supplier to take this step, although Co-operative Energy said in December that it would bring in cuts of 3% by February.
What next?By rights, we should be overwhelmed by the number of suppliers making the move. After-all when they increase their tariffs they blame wholesale costs, so surely the fall in these costs should trigger costs just as swiftly. However, we all know that this isn't how things happen.
The question is whether the actions of these smaller players will inspire the Big Six to do the decent thing. Byrom says: "The spotlight shines even brighter on the 'Big Six' to pass on the current savings made from the fall in wholesale costs. "
The companies themselves argue that it's harder for them to cut prices quickly because they buy more of their energy in advance, so they don't benefit from lower prices so quickly. If prices continue to fall, then there's a chance prices will come down across the board.
However, as Byrom says "While we may be on the cusp of a sea change in the industry bill payers can take action and make their own savings by making sure they are on the best energy deal for their usage and region. Consumers who move on to the OVO Energy 'New Energy Fixed' tariff can expect to save around £230."