Energy giants pocket £75m of green tax cuts which would have helped millions of households save £50 on their energy bills


Millions of households have missed out on a £50 saving on their energy bill because a green tax cut has been swiped by suppliers.

All of the big six firms — British Gas, EDF Energy, Eon, Npower, Scottish and Southern Energy and Scottish Power — will save money this year after the Government slashed network charges and the cost of implementing green schemes.

And they will no longer have to pick up the tab for a Warm Home Discount — which gives vulnerable customers a £135 reduction on their electricity bill, according to This is money.

The Government says these changes would save households around £50 on their annual gas and electricity bill.

However, four months on and millions of customers have not received a penny in discount.

An estimated five million households have missed out on the reduction because they are on a fixed-rate deal.

The energy companies claim most people have benefited by up to £35. But this still means they have pocketed the remainder — at £15 from each fixed-rate customer, that makes £75 million.

Npower has told customers they would receive a bill cut from February only if they were on a standard or variable tariff and had been affected by a price rise last December.

Its fixed-rate customers get no price cut. They are effectively still paying the green tax because it is priced into their bills.

Customers on fixed tariffs with ScottishPower also missed out. The firm said it would cut their bills only if customers ended up worse off than those who are on variable deals.

EDF Energy and Eon have similarly neglected customers locked into fixes. Their customers have had potential price hikes lowered instead of receiving reductions to their current bills — but this affects only those on variable deals.

British Gas, Scottish and Southern Energy have reduced bills for all their customers — both on fixes and variable deals.

The suppliers are also hiding behind a baffling array of price hikes and cuts.

British Gas shaved 3.2 per cent, or £38, off its average gas and electricity bill in January.

But it raised prices by 9.2 per cent in November — meaning the average gas and electricity bill is now 6 per cent higher than last year at £1,193.

Npower cut its average bill by 2.6 per cent or £31 in February. But it had hiked bills by 10.4 per cent in December, which means that customers are still paying 7.8 per cent more at £1,205 a year. A further problem is that Ofgem changed the way average bills had to be stated in January.

In effect, it cut the average estimated amount of energy that homes use to reflect how much more energy-efficient they are.

So, when the Government said in December that the green tax cut would save customers £50, it based this estimation on the average household using 16,500 kWh of gas and 3,300 kWh of electricity.

But when firms reduced their bills this year, the new average usage levels of 13,500 kWh of gas and 3,200 kWh of electricity had already come into play.

It’s a complicated equation, but what it really means, according to calculations from comparison service the Energysaving helpline, is that most homes have saved only £28 since the green tax cuts were introduced.

Energy firms have also dragged their heels over passing on the savings to customers. British Gas was the first to cut bills for customers on January 1, but Scottish and Southern Energy did not reduce their bills until March 28.

ScottishPower passed on cuts on January 31, while Npower did so on February 28.

Ann Robinson, director of consumer policy at price comparison website uSwitch, says: ‘The fact is that suppliers could have made this whole process simpler by cutting prices across the board for both variable and fixed-price customers. It would have been fairer and easier for consumers to get their heads around.

‘Instead, it looks as though some suppliers are cherry-picking who should benefit. Those who won’t be getting a price cut, even if it’s for a valid reason, will be left feeling hard done by and that’s a real shame given that this whole thing should have been an easy way for suppliers to regain lost ground with customers.’

All electricity customers are expected to receive a further £12 credit in the autumn as a result of firms no longer having to pay for the Warm Home Discount, regardless of what deal they are on or how they pay.

A spokesperson for industry body Energy UK says: ‘Energy suppliers are committed to delivering the cuts in green taxes as cost-effectively as possible — while complying with Ofgem’s rules and keeping customer service at the forefront of activities.

‘The major companies have all already announced that they will pass on savings of between £30 and £35 to customers.

‘The cost of delivering the cuts will vary from company to company, but the industry welcomes further transparency to make it more open and easy to understand.’