Energy News

British Gas cuts electricity prices by 5%

Thursday 12 January, 2012

By Martin Fagan

Parent company Centrica announces electricity price cut but said it was unable to lower gas prices.

British Gas has announced it will cut electricity prices by 5% with immediate effect.

This follows on from yesterday’s announcement that EDF Energy was cutting its gas prices by 5% for 1.4 million of its 3.8 million customers from 7 February.

British Gas said five million of its single rate electricity customers on a variable tariff will benefit from the price cut and will each save an average of £24 a year.

However, British Gas said it would not be reducing gas prices because, although it admits there has been a recent fall in the wholesale price of gas, the company says this fall is “short term” and claims the “forward” price for gas bought now to be delivered at the end of 2012 is substantially higher.

The move follows a trend set by the smaller, independent suppliers. Last week, Ovo Energy announced a 5% cut to its fixed energy prices and, last month, Co-Operative Energy announced a 3% decrease on its energy prices.

“We want to keep prices as low as possible for our customers,” said Ian Peters, managing director of energy, at British Gas.

“Household budgets are stretched, and we are doing everything we can to help our customers keep their bills down.”

However, the 5% reduction in electricity prices comes after British Gas raised prices twice in the last 12 months. In December 2010, it raised both gas and electricity prices by 7%. In October 2011 it hiked electricity by a further 7.2% and increased gas by 15.7%.

“Although British Gas customers will feel the benefit immediately, many will feel disappointed that they won't see their gas bills decrease, especially with temperatures expected to drop,” said Ann Robinson, director of consumer policy at uSwitch.com.

“We hope that this will be just the first cut, and that further reductions will follow. However, this cut will go nowhere near cancelling out the 21% hike in prices in the last 18 months.”