In a surprise move, British Gas announced a 7% cut in its gas and electricity prices yesterday, leaving the energy market on the brink of a price war.
The price cut makes British Gas the cheapest amongst the Big Six energy suppliers. The saving is set to affect around 8 million households, who are likely to save on average £55 each. There is also good news for pre-payment customers, who have been given a 9% saving, which aligns their tariffs with standard ones.
This is a welcome move from the largest of the Big Six energy suppliers, and the timing is also favorable, following recent reports about how worried households are about the cost of their heating bills this winter.
British Gas’ managing director, Phil Bentley said ‘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 cuts take the company’s average annual dual fuel bill to £1,123, versus £1,310 in January 2009. Critics are saying this is still not enough, because customers are still paying considerably more since January 2008, when wholesale gas prices were high – the average bill then was £1,055.
Nevertheless, consumer groups are nodding their heads in approval. Audrey Gallacher from Consumer Focus described it as ‘….a rare piece of good news’, and urged the other suppliers to respond with further cuts. She also advised customers to wait, because better deals elsewhere may be available imminently.
So will there be an energy price war? Industry experts believe so.
Andrew Horstead, from Utilyx – the energy and carbon advisors said ‘We have already seen a price war in the online market and we hope that this latest move will stimulate a similar response from the other suppliers to pass on lower cost to their beleaguered customers.’
The Department of Energy and Climate Change said ‘We have 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.’
Sources:
http://www.independent.co.uk/news/uk/home-news/price-war-hope-as-british-gas-cuts-bills-1889928.html
http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article7015729.ece
http://news.bbc.co.uk/1/hi/business/8497488.stm
