Outfox the Market has become the latest supplier to announce it is dropping prices, following other challenger suppliers.
The energy retailer, which has more than 90,000 customers, says it has cut gas prices by 5.5 per cent and electricity unit rates by 2.5 per cent.
This, it says, will mean customers will see a 3.4 per cent reduction in energy prices, with the average customer bill falling by over £40 a year.
Outfox joins London-based renewable energy supplier Bulb and Southampton-based Igloo Energy, both of which announced recently they were cutting prices.
Keith Bastian, chief executive of Outfox the Market, said: “We track the market and base our prices on the wholesale cost.
“Despite what many suppliers may want you to believe, the price of the commodity has reduced in recent weeks and as promised, we pass these savings back to our customers.”
While the wholesale costs of energy have dropped in recent weeks, the price cap was calculated at a time when wholesale costs were rising, resulting in an increase of £117 for customers on standard variable tariffs (SVTs).
Analysts at Cornwall Insight predict that with wholesale costs beginning to decrease the price cap is likely to fall by around £50 in the next readjustment.
This is assuming wholesale costs remain at the same level the market experienced at the end of January.
Following last month’s announcement by Ofgem that the price cap was to rise to £1,254 from 1 April, all six of the large suppliers announced they would raise their SVTs to the level of the cap.
Co-op Energy and Ebico announced they too would raise their prices.
Bastian added: “Some energy companies have seen the price cap as an opportunity to boost their profits.
“All the cap has done is push the average price up making things harder for a lot of customers.
“We are committed to helping customers cut their bills and we will announce further price drops if the market continues to fall.”
In November Outfox announced two price hikes, prompting further concerns within the industry that the supplier may be struggling financially.
Prices reportedly increased around 40 per cent from £807 in June last year.