British Gas to cut household bills by 7% » Bill Payments » 24dash.com

British Gas today cut average gas bills by 7% in a move set to benefit around eight million households.

The reduction, which is effective immediately, comes amid falls in wholesale prices from their highs of two years ago.

British Gas said customers will save an average £55 a year as a result of the move, which is the third cut in energy prices from the company in the past 12 months.

The gas price cut comes after a period of freezing winter weather which raised the spectre of a huge hike in energy bills.

Managing director Phil Bentley said: "At British Gas, we know household budgets are stretched, and that our customers are concerned about the effect the recent cold weather will have on their winter fuel bills.

"I'm pleased we're able to offer our customers some extra help with this gas price cut - and that we're able to do this while it's still winter, allowing our customers to really feel the benefit."

The cut is an average across all regions and all paying methods, although those using pre-payment meters will have a slightly larger reduction as the firm removes the price difference between pay methods.

British Gas said the bill reduction means it is now on average the cheapest supplier of standard rate gas and electricity.

It is the first of the big suppliers to make an energy price cut this year, and the move could spark cuts among its rivals.

A spokesman for British Gas said the recent drop in wholesale gas prices had enabled the firm to cut bills.

But he said the market remains particularly volatile, with prices trebling on a single day during the snowy weather before settling again.

The average dual fuel bill is now £187 lower than during the peak in prices in 2008, at £1,123 a year.

Yesterday, watchdog Ofgem warned that prices could become increasingly unaffordable for many households and businesses as Britain struggles to bridge the gap between ageing infrastructure and new energy generation.

Gary Smith, national officer of the GMB union which represents British Gas workers, said: "British Gas has been buying gas cheap and selling it dear all winter.

"This price cut should have been made before the cold snap. British Gas should be offering its customers a rebate to reflect this.

"Ofgem said yesterday that the energy market was not working and this announcement demonstrates that clearly."

A spokesman for the Department of Energy and Climate Change said: "We've said for some time that householders must start to see the benefit of lower wholesale gas prices.

"This is very welcome news at a time when many will be facing the prospect of hefty winter bills. We expect to see other firms follow suit as quickly as possible.

"Lower income consumers will particularly welcome, as we do, the abolition of the price differential for pre-payment consumers."

Gary Smith, national officer of the GMB union which represents British Gas workers, said: "British Gas has been buying gas cheap and selling it dear all winter.

"This price cut should have been made before the cold snap. British Gas should be offering its customers a rebate to reflect this.

"Ofgem said yesterday that the energy market was not working and this announcement demonstrates that clearly."

A spokesman for the Department of Energy and Climate Change said: "We've said for some time that householders must start to see the benefit of lower wholesale gas prices.

"This is very welcome news at a time when many will be facing the prospect of hefty winter bills. We expect to see other firms follow suit as quickly as possible.

"Lower income consumers will particularly welcome, as we do, the abolition of the price differential for pre-payment consumers."

Dave Prentis, general secretary of Unison, said: "Other suppliers should take a lead from British Gas and cut their prices sooner rather than later.

"Despite the bitterly cold weather, we know that people have been forced to cut down on their heating because of the enormous bills they know will be dropping through their doors.

"Average energy bills have doubled in the last five years and the country now faces a fuel poverty crisis, with six million households unable to afford to heat their homes."