BRITISH Gas is reducing household gas prices by five per cent, cutting annual energy bills by an average of £37.
The company, which is owned by utility firm Centrica, said the reduction in standard tariffs will benefit 6.8m customers.
According to British Gas, the price cut reflects recent declines in wholesale gas prices, and although most of the gas currently in use in customers’ homes was bought at “higher 2013/14 prices”, the firm’s wholesale costs for 2015 “are now reducing to a level where we can pass this reduction to our customers”.
Iain Conn, chief executive of Centrica, said the company had 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,” he added. “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.”
Meanwhile, Michael Uzielli, finance director at British Gas, declined to comment on whether the price reduction had anything to do with Labour’s proposed price freeze.
“Our pricing decisions are taken on the basis of our costs and how they move up and down,” he said. “It’s not a political decision.”
The move follows E.On’s decision on to cut its prices on 13 January.
Ann Robinson, director of consumer policy at uSwitch, commented: “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.”
Centrica’s shares dipped slightly by 0.04 per cent yesterday.