British utility Centrica said it will cut household electricity prices by five per cent with immediate effect, one day after rival EDF Energy announced plans to slash gas bills, also by five per cent.
The utility, which owns Britain's largest gas supplier British Gas, said it was unable to cut gas bills as long-term costs for the fuel remained high despite some short-term wholesale price falls.
"We want to keep prices as low as possible for our customers. Household budgets are stretched, and we are doing everything we can to help our customers keep their bills down," said Ian Peters, managing director of energy at British Gas.
Britain's largest six energy suppliers, which control 99 per cent of the retail energy market, have come under growing pressure to cut domestic energy bills as wholesale energy prices, which make up half of the costs of energy bills, have fallen due to the mild winter weather and the weakening economy.
Energy suppliers angered already cash-strapped Britons in autumn last year, when they raised average energy bills by double digits.
On Wednesday, EDF Energy announced a cut in its gas rates, but kept electricity prices unchanged, saying its increases in November were inflation based.
Analysts also expect the remaining major suppliers, RWE npower, SSE, Scottish Power and E.ON , to make retail price cuts.