The company also plans to give businesses a rebate in March of 2 per cent on their annual bills. Norweb said the changes reflected better prices for electricity supplies from the generators and lower operating costs.
Norweb's price reductions are the latest in a series of cuts and freezes announced by electricity companies. Others are expected to follow suit. Seeboard also said yesterday that it would cut tariffs for domestic customers and small businesses by 2 per cent from April, in addition to an pounds 8 rebate announced earlier this month.
Under their price control formulae, the companies pass through changes in electricity purchasing costs to domestic and other franchise customers, either in the form of adjustments in prices or rebates.
Analysts say that the latest round of cuts reflects a drop in the prices paid to British Coal by the generators, which fell by almost a fifth last year and are expected to decline further in April.
The cost of electricity generation accounts for over half of a domestic bill - the other large components are electricity distribution costs and a levy that supports nuclear power.
Cuts or rebates may also be needed if the companies make a wrong forecast of inflation when they set their prices for the year.
Ken Harvey, Norweb chairman, said customers would receive their first bills at the reduced rate in July, based on the first meter reading since 1 April 1994.Reuse content