In a move that will put pressure on other suppliers to follow suit, British Gas has announced it will cut residential gas prices by an average of 7 per cent with immediate effect
The company, which is the UK's biggest provider, said the price cut would benefit eight million customers and save the average household £55 a year.
This is the third time the energy giant has cut prices in the past 12 months, and it claimed it was now the country's cheapest major supplier of gas and dual fuel packages.
At the same time, it said it was removing the premium it charges customers on pre-payment gas meters so they will now pay, on average, the same for their energy as those who pay by cash or cheque.
Customers who have recently signed up to British Gas's fixed-rate Price Guarantee March 2011 tariff will also see prices fall.
The move comes just a day after the energy regulator Ofgem warned that energy bills could break the £2,000-a-year mark by 2020, and at the end of a particularly cold winter which was expected to add around £70 to average winter fuel bills.
"Energy prices increased by 42 per cent, or £381, in 2008 and suppliers cut prices by 4 per cent, or £54, last year,” said Ann Robinson, director of consumer policy at price comparison website
uSwitch.com. “Other energy providers will now be under pressure to cut their tariffs, but consumers should not expect prices to return to 2008 levels.
"If today's move is an indication of what can be expected from other suppliers, consumers can still expect their household energy bills to be around £270 higher than just a couple of years ago, even after price cuts.
"This means that the overall trend in household energy prices is upwards, and consumers must start looking out for themselves."
Figures from uSwitch show the average household bill for a dual fuel
British Gas customer will now drop from £1,202 to £1,147, which is £235 or 26 per cent higher than its average bill of £912 in January 2008.
The actual level of the price cuts will depend on where a customer lives and how they pay, but a spokesman for British Gas said they would not vary widely and most customers would see gas bills fall by around 7 per cent.
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