British Gas has today announced a cut in its standard domestic electricity prices of 5% with immediate effect.
Yesterday Utility Exchange reported that EDF Energy had announced a cut of 5% in its standard gas tariff. Now British Gas has followed this announcement with a cut of 5% in its standard domestic electricity prices.
British Gas said the price cut would take effect immediately and it would ensure British Gas is the “cheapest major standard electricity supplier, on average, in Britain”.
The price reduction will benefit all customers on the British Gas single rate electricity variable tariff. There are some 5.3 million consumers set to benefit from average savings of £24 on their yearly electricity bill.
Speaking from British Gas, Ian Peters 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”.
The move comes after British Gas increased electricity prices by 16% last August and at the same time increased gas prices by 18%.
While the EDF cut in gas prices won’t come into effect until the 7 February, the British Gas cut in electricity prices will come into effect immediately.
EDF Energy said they were cutting gas prices due to the recent fall in wholesale gas prices. However, British Gas said it wasn’t cutting gas prices because while there had been a short-term fall in the wholesale gas prices the long term trend was up.
Business gas prices and domestic gas prices are different because energy suppliers buy domestic gas in advance whereas business energy is bought when it’s needed. This is why business gas tariffs and business electricity prices change from day to day while domestic prices are more static.
While the price cuts by both EDF Energy and British Gas are good news for consumers, they make little difference when compared to the huge price hikes in the summer of 2011. However, we are likely to see further price cuts from the rest of the Big Six energy companies but it remains to be seen which one will be next.