It looks as if an energy price war is about to break out, offering the prospect of significant savings for those willing to switch tariff or supplier. Meanwhile, those who do nothing could find themselves paying hundreds of pounds a year more.

With the cost of oil at a 12-year low, power companies are finally beginning to reduce some of their prices – and where one or two go, others are likely to follow before long.

E.ON set the ball rolling with a 5.1 per cent cut in its standard gas tariff that takes effect on Monday. This will be worth just £32 a year to the average customer. At the same time, it announced a one-year fixed dual fuel tariff with a typical annual cost of £783, a saving of around £300 on the average bill.

The following day, SSE launched an equivalent tariff costing £775, and a day after that, E.ON reduced its price to £769, making it the cheapest tariff of its kind since March 2011.

Stephen Murray, energy expert at MoneySupermarket.com, said: “E.ON has made a very clear move in response to falling wholesale prices and consumer outcry to cut household costs, and this will hopefully force the other Big Six players to cut standard prices for both gas and electricity.”

However, customers who do nothing, in the hope that their supplier will be among those to make a reduction, could be missing the chance to save hundreds of pounds a year.

Ben Wilson, energy spokesperson at Gocompare.com, said: “While the price reduction for standard tariff customers will be welcomed, the message from E.ON is quite clear – if you really want to save big money on your energy bills these days, you need to switch to a better deal. Standard tariffs almost always represent the absolute worst value, and should be avoided where possible.”

This is particularly timely advice for households on the 26 fixed dual fuel tariffs that end tomorrow. Those who don’t make the effort to find a new deal will be moved onto their supplier’s standard tariff, costing an average of £207 a year more.

Gocompare.com says the highest rise – for Extra Energy customers coming off Fresh Fixed Price Jan 2016 v10 – will be almost £260.

Households on four of the 26 fixes will pay less by moving onto the equivalent standard deal. These are M&S Energy’s two Fix & More Jan 16 tariffs, First Utility iSave Fixed v10 January 2016 and ScottishPower’s Fixed Price Energy February 2016 Online.

However, the cut will range from £4 to £29 a year – a negligible amount compared to the hundreds to be gained by shopping around for a new deal.

Despite the savings that can be made, fewer than a fifth of people changed energy supplier last year. One of the main reasons given for staying put is the fear that switching will be complicated and time consuming.

In fact, most of those who do it find the process quick and easy. The simplest way to compare deals is via a website such as www.which.co.uk/Switch, run by? consumers’ organisation Which?

You choose your current supplier and tariff from dropdown menus and input your annual consumption from you latest bills or online account. The site produces a list of options and the savings they represent. If one of them takes your fancy, you follow the link to make the switch.

An even easier – and potentially cheaper – option is to register for a collective switch, which uses the buying power of thousands of customers to persuade suppliers to offer the cheapest 12-month fix.

You input the same details as for a conventional comparison site, and when the auction takes place you receive an email outlining the winning bid and how much it would save you. There is no obligation to proceed, but if you decide to, it takes just a few clicks of the mouse.

Registration for the latest UK-wide Big Community Switch (https://bigcommunityswitch.ichoosr.com) closes on Monday, with its auction taking place the following day, while the next Collective Big Energy Switch (www.collectivebigswitch.com) is open until February 14.

If you are tied into an existing deal or would like a little longer to consider your options, North Lanarkshire Council will launch its next Big Switch in March.

The 1,700 households from across Scotland who took part in its first switch, last spring, saved an average of £313. The initiative was so successful it has been shortlisted for Campaign of the Year in the 2016 UK Housing Awards.

Details of the council’s new initiative will be announced shortly on www.northlanarkshire.gov.uk.

CASE STUDY

Stephen Llewellyn was amazed to discover he would cut his annual gas and electricity bill by £750 simply by switching supplier.

The housing manager from Coatbridge took part in North Lanarkshire Council’s autumn Big Switch, moving from Scottish Gas to the winning dual fuel deal offered by E.ON.

Stephen said: “I’d switched providers a long time ago and didn’t have a good experience, which is probably why when everybody told me how wonderful the council’s first Big Switch was, I didn’t listen.”

However, when he saw how much other people had saved, he decided to take part in October’s Big Switch 2.

He said: “I persuaded my mum and dad to do it too. They’d never switched before, so I did it on their behalf, and they saved about £250.

“You register online and everything is done by email. You get your offer and click to accept. The whole process was so easy, it took no more than five or ten minutes. When this deal ends, I’ll definitely be doing it again.”