British Gas, npower, Powergen and Scottish and Southern Group, who between them service about 70% of British homes with gas and electricity, have recently announced double-digit price decreases for their customers.

Yet when looking at the average prices for the suppliers that have published their new tariffs, UK households are only slightly better off than they were at the same time one year ago. In percentage terms, the average price cut announcement amounts to just 8% less compared to the prices that were valid as recently as last summer.

Energy prices began to climb in the middle of 2001, when an average household paid only £567 for their gas and electricity (paying by monthly Direct Debit, and using 20,500kWh of gas and 3,300kWh of electricity, supplied by British Gas for gas and the local incumbent electricity company). Households supplied by the four suppliers above today will thus still be paying an average of £300, or 53%, more.

The wholesale price of gas and electricity has stayed consistently low in recent months, and consumers are therefore right to demand and expect further cuts from their suppliers. The suggestion that suppliers are able to hang on to inflated profit margins at the expense of the UK consumer means that the market is not as competitive as it should be.