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Price war heats up between small energy providers

Lucinda Beeman
Written By:
Lucinda Beeman

A new price war has begun between small energy providers First Utility and Ovo, with both launching tariffs under £1,000 in the space of week.

Last week Ovo made headlines by launching its Cheaper Energy Fixed tariff, priced at £998 a year.

Yesterday First Utility responded with its iSave Fixed July 2015 tariff, which is £4 cheaper.

Mark Todd, director of price comparison website energyhelpline.com, said: “These new deals have created a massive gulf between them and the big supplier’s standard prices, which most consumers pay.”

A typical gas and electricity bill is £1,315 a year, according to industry regulator Ofgem, and offers no price guarantee.

Consumers could save up to £321 a year by switching to First Utility’s newest tariff, Todd said. 

“The smaller suppliers are sending warning signals to the ‘Big Six’ stating that they are not to be underestimated and are well and truly a force to be reckoned with,” he added.

“Consumers need to step back and ask themselves where they stand on standard prices.”

The ‘Big Six’ energy providers face investigation by the Competition and Markets Authority (CMA) after an Ofgem report released last month revealed “possible tacit co-ordination” on the size and timing of price rises.