Make money from the energy price war!

The big six energy providers are coming under pressure from the new guys, with prices being cut almost by the day! But is it all for show? How much can you actually save?

If you're anything like me, you have probably started to get a bit bored with football lately (and not just because West Ham are rubbish at the minute). It's always the same old names, the big four that seem to call the shots.

It's been the same with energy prices for a long while as well - in this case the big six, all choosing not to compete properly, and instead fiddle around with their middling tariffs, giving the appearance of competition, but in reality doing very little of any meaning.

But the last few weeks have seen the emergence of two smaller players - First:Utility and Ovo Energy - apparently making a real fist of cutting tariff prices in a meaningful way.  So are we really in the middle of a proper energy price war?

Let's have a look!

The new guys

OVO Energy made a bit of a statement back in September when it launched two very competitive deals, including a green energy plan, which it claims provides 100% green electricity.

It was followed by First:Utility, which didn't simply compete with its own iSave online tariff - it jumped straight to the top of the table! And it finished September still holding the top spot.

The big boys bite back

Clearly the fact these young upstarts had dared to show such gumption has irritated the bigger boys, as a flurry of further cuts have now taken place.

First we had EON cutting the price of its cheapest dual fuel product, the FixOnline 3, by a whole £19, which it claimed made it the cheapest dual fuel product available on a nationwide basis, saving customers £27 compared to the average UK bill.

A brilliant bonus to this cut was that customers who had signed up in August were also passed on the saving, which amounted to 1-2% in most regions.

But within hours First:Utility had responded, cutting the price of both of its dual fuel tariffs - iSave Dual Fuel and Smart Dual Fuel online saver - with both new and existing customers benefiting from the reduction, and claiming it was now the cheapest in the UK.

The energy tariff Top of the Pops

So, just how do things now look for dual price tariffs after this latest round of price cuts?

Table based on medium use

As you can see, First:Utility have indeed jumped right to the top of the table, while fellow newcomer OVO Energy continue to hold their own in competing with the more established names. I'll be staggered if we don't see further changes from bigger firms like British Gas and npower - they can't be happy at looking so expensive in comparison.

Fiddling around the edges

The trouble is that, while the providers are happy to tinker a little here and there, and lop off £20 or £30 a year, that's not a massive difference really is it? Particularly given the way that the wholesale cost of energy has plummeted over the past 12 months.

Back in August, Ofgem, the energy watchdog, published an open letter to the heads of the big six firms, demanding they make it clear to their customers why there had not been further cuts in price since wholesale energy prices had fallen 50% from their peak.

And I was reasonably optimistic that such a public dressing down would have the desired effect.

Clearly I was being a bit too optimistic. Indeed, npower have not even adjusted their tariff since then (though they are the only provider not to have made at least slight changes).

A number of consumer groups, including Consumer Focus and Which have now publicly slammed Ofgem for being toothless and doing little to help consumers avoid paying more than they have to, and it's hard to defend the watchdog on this one.

It needs to back up its warnings with some actual backbone. Currently its bark is far more noticeable than its bite.

Get off that standard tariff!

However, if you are one of those Brits still on your provider's standard tariff, you should waste no time in searching around for a better deal. The vast majority of people in the UK can't be bothered to shop around for a new energy supplier because they think it will be hassle, so end up paying loads more than they should.

That's utter madness! Not only are you throwing your money away, but it only takes about 10 minutes to switch tariffs using lovemoney.com's very own energy price comparison tool.

In fact, even if you have moved away from a standard tariff, it's still well worth your while using our tool to see just how cheap you can get your energy - the average saving lovemoney.com users have reported from using the tool is a whopping £215!

More: Slash the cost of your energy bills | Now is the best time to switch energy tariffs