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British Gas and Scottish & Southern Electricity (SSE) have announced price cuts after a drop in wholesale energy prices owing to low energy use during the mild winter.

British Gas has cut its electricity prices by 5% with immediate effect while SSE will reduce its gas tariff by 4.5% on 26 March.

Up to 9 million households will see their energy bills fall as a result.

The price cuts come following EDFs move on Tuesday to cut its gas tariff by 5%. Other energy suppliers are now hoped to reduce their prices following this price drop by three of the 'big six' energy suppliers.

The move will be a welcome boost to cash-strapped households as British Gas said the average annual domestic bill would fall by £24.

However, despite the reduction consumers will still be paying more on average for their gas than they did at this time last year, after a 16% rise in electricity prices and an 18% rise in gas prices for British Gas customers in August last year.

SSE had also raised gas prices by 18% and electricity prices by 11% in September 2011.

Ian Peters, managing director of energy at British Gas, said: "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."

Whilst British Gas has lowered its electricity prices, its gas tariff will remain the same. British Gas has said that its static gas prices were because, although there had been some short-term falls in the cost of gas, longer term wholesale prices was upward.

Contradictingly, SEE is to drop gas prices but keep electricity prices the same.

Critics have pointed out that these differing price drops will confuse many and knock consumer confidence.

Speaking to the Guardian, Clare Francis of Moneysupermarket, said: "At a time when energy companies are trying to improve transparency and openness in the industry, these conflicting messages are not helping to rebuild trust."

 

Momentum