British Gas to cut prices by 5%
- Credit: PA
British Gas is to cut household gas prices by 5% in a move it says will benefit 6.8million customers.
The energy supplier, owned by Centrica, said the move would on average cut annual energy bills by £37. It will apply from February 27.
British Gas said the cut reflected the recent fall in wholesale gas prices. It comes after energy suppliers have come under pressure from politicians and regulators to pass on lower costs to households.
British Gas said most of the gas being used in customers’ homes today was bought at higher prices over 2013/14 but wholesale costs for 2015 were now coming down to a level where the reduction could be passed on.
It said it would be keeping prices under review “for further movements up or down”.
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The British Gas announcement comes a week after Big Six rival E.ON became the first to react to falling wholesale gas prices by announcing an immediate 3.5% cut in gas tariffs on January 13.
It follows pressure from Labour which proposed to give new powers to Ofgem to allow the regulator to force companies to pass on falls in the price of wholesale oil and gas to consumers.
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Estimates suggested this could knock £136 off the average bill.
The announcement comes less than a month into the tenure of new Centrica chief executive Iain Conn, a former BP executive.
Mr Conn said: “We’ve been watching the significant moves in the international energy market extremely closely for some time, with the aim of helping customers with a price cut at the earliest possible opportunity.
“Operating in such a volatile market, no pricing decision is straightforward.
“We bear the responsibility of managing the risks of buying energy ahead on behalf of our customers, who value the predictability this brings.
“Taking this decision now, at a time of continuing uncertainty, shows our absolute commitment to pricing competitively, with customers at the forefront of our minds.”
Ian Peters, interim managing director of British Gas, said: “This price cut, worth £37 off the average annual bill, will help our customers keep their energy costs down at a time when many household budgets are still under pressure.”
Ann Robinson, director of consumer policy at uSwitch.com, said: “With gas prices falling for well over a year now, today’s decision by British Gas to follow E.ON’s lead with a reduction in standard tariff prices hasn’t come a minute too soon for its customers. Lower prices are good news for consumers but we believe that prices can and should be cut even further.
“As two of the big six suppliers have now lowered their standard prices, the pressure is well and truly on EDF Energy, npower, ScottishPower and SSE to follow suit.
“Reductions in standard tariffs are good news for customers, however the biggest savings are to be found by switching to more competitive fixed deals – which are over £250 a year cheaper than the average standard big six Direct Debit standard tariff.”