More power firms cut energy tariffs


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The Independent Online

British Gas cut bills for more than five million customers today by announcing an average 5% drop in its standard electricity tariff.

The price cut will take effect immediately and will knock £24 from the average bill - six months after the Centrica-owned company increased gas bills by 18% and electricity by 16% in August.

While British Gas said there was no reduction in its gas price, Southern Electric and Swalec owner SSE said later that it would cut the price of household gas by 4.5% from March 26.

The moves follow an announcement yesterday by French-owned rival EDF to cut gas prices by 5%. Other operators are expected to follow suit.

British Gas claimed the price reduction meant it now offered the cheapest standard electricity, on average, of any major supplier.

It added that its move, which follows a pledge by the energy giant not to raise prices throughout the winter, will save customers more than £100 million in reduced bills.

Ian Peters, managing director of energy at British Gas, said: "Household budgets are stretched and we are doing everything we can to help our customers keep their bills down."

All the big six major suppliers increased prices over the summer following hikes last winter, tightening the squeeze on cash-strapped households.

But recent reductions in wholesale energy prices have led to calls for suppliers to reverse hikes.

SSE said around 3.5 million households in Britain will benefit from its reduction, which will cut typical gas bills by around £28 a year.

It has also extended its commitment to cap household electricity and gas prices by two months to October, although it said it will look to implement more price reductions if it can.

Customers of M&S Energy, which is supplied by SSE, will also benefit from the gas price reduction and the extended gas and electricity price cap.

SSE increased household gas prices by 18% and electricity by 11% in September.

Alistair Phillips-Davies, its generation and supply director, said: "I hope that this package of measures will give our customers some respite from the seemingly endless rises in household costs that we have seen in recent times."

British Gas said its move would bring the average price of a dual fuel bill down £24 to £1,189.

Ann Robinson, director of consumer policy at uSwitch, said it was disappointing that none of suppliers had announced cuts for both gas and electricity.

She added: "The bottom line for consumers is that these cuts will go nowhere near cancelling out the £224, or 21%, hike in prices they've seen in the last 18 months.

"We can only hope that these reductions are the first and more will follow."

While British Gas customers will benefit immediately, EDF Energy's cuts will not come into force until February and SSE prices will not drop until the end of March - towards the end of winter.

Mark Todd, director of the independent price comparison service Energyhelpline, said: "We believe there is room for price cuts of up to 10% because of the recent dramatic falls in wholesale prices but clearly the major suppliers do not feel they have the necessary leeway to go much further than 5%.

"This may be because they are worried about their profits but also because they genuinely think that wholesale prices could go back up and that investment in green energies is limiting their room for manoeuvre."