Challenger firm Igloo has announced it will be cutting as much as 30% off gas customer’s prices, varying according to the cost of distribution in different regions across the UK.
This decision from the small energy supplier means that typical customers under its single tariff can enjoy up to £320 cheaper bills annually compared to standard deals from larger energy companies. It’s a considerable benefit provided that the industry watchdog Ofgem has recently reduced its price cap.
Price Cuts Amid Coronavirus
Igloo Energy has decided to grace its customers with up to 30% reduction for gas prices, which could mean as much as £320 savings per year on typical use.
The firm indicated that price reductions could vary based on distribution costs regionally, which means that customers may see between 22% to 30% of price cuts on their bills. It cited the coronavirus pandemic reduced industrial demand significantly, causing wholesale gas prices to fall.
While wholesale electricity prices have also decreased, higher distribution costs and renewable scheme trends signify that electricity deals will remain unchanged despite the gas price drop.
The firm’s savings are passed on to its customers at a much faster rate. It has made three previous price drops in 2019, which totals to four price plunges in eighteen months. The firm also added that consumers could switch to Igloo and its new pricing without any complication. The new prices have taken effect on April 15.
Price Cut Explained
Igloo Energy CEO Matt Clemow stated that the company is proud to lower customer’s bills during this challenging time for every UK household. COVID-19 has severely impacted different industries, consequently reducing global prices on natural gas dramatically. He also said that the crisis changed the way homes use energy, which is why the Igloo price cut is timely as it passes significant savings to customers.
Clemow also expressed how proud their team is for supporting customers throughout this crisis, highlighting their exceptional service granted to customers.
Igloo Energy lowers its gas prices while maintaining gas standing charges. The price drop will grant dual fuel customers on average use with more than £175 savings per year. Its dual-fuel tariff belongs to the most competitive tariffs available in the market today.
The supplier also indicated that no changes would be made to the electricity prices.
Igloo Energy continues to promise competitive and transparent pricing for its single variable tariff. The supplier lauds its simple tariff, which eliminates the worry for consumers who have experienced being switched to an expensive variable tariff when their deal ends.
The challenger firm also pointed out that Ofgem’s £1127 price cap is £322 more expensive than the average bill per year for the Igloo customer based on typical use. It also cited that there are no exit fees when a customer chooses to part ways with the supplier.
Updates on the Energy Market
Before the COVID-19 pandemic, wholesale gas prices have started to fluctuate for some time. However, the coronavirus crisis has magnified the effect, causing a sharp drop in gas prices. Igloo believes that the price will stay low for the foreseeable months, which means that customers can continue to enjoy savings for their energy bills.
Gas storage facilities have filled up a significant portion of Europe, resulting in lower wholesale gas costs. The industry attributes it to the milder winter, which enabled gas reserves to be maintained. Additionally, the current political climate is balanced, keeping the gas supply at a favourable level and without much disruption.
On the other hand, the overall costs related to electricity supply has increased despite wholesale electricity prices falling. The decrease is not as steep as gas prices, which means that the reduction in wholesale costs does not translate to electricity savings. The company stated that its distribution, renewable schemes and policies have seen an increase from April 1.
These factors prevent Igloo to lower its electricity prices, although it also has not made any price rise for related costs.