Gas and electricity Updated:
British Gas has become the second supplier to reduce the cost of gas for its customers following the dramatic fall in wholesale prices, with a 5% cut coming into force on 27 February. This will reduce the typical household's energy bill by around £37 per year, with some 6.8 million customers expected to benefit.
The cuts apply to its Standard and Fix & Fall tariffs, with the February date being the "earliest opportunity" that the supplier could pass on their own savings from the reduction in wholesale costs, something that they've come under increasing pressure to do. Customers won't need to do anything to benefit from the reduction, and will receive confirmation of the new price on their post-27 February bill.
Ian Peters, interim managing director of British Gas, commented: "This price cut, worth £37 off the average annual bill, will help our customers keep their energy costs down at a time when many household budgets are still under pressure. We're pleased that existing customers on our Fix & Fall tariffs will also see the benefit of this price reduction. We know customers expect competitive pricing and good value from British Gas, and we continue to keep our prices under constant review."
The move follows that of E.ON, who last week announced that they were cutting standard gas prices by 3.5%. However, both have come under criticism for not making more dramatic rate cuts, particularly given the 20% reduction of wholesale costs in the past year. Iain Conn, chief executive of Centrica – the group behind British Gas – responded by saying that "no pricing decision is straightforward" when operating in such a volatile market, but that may not be enough for consumer groups.
What's also disappointing about this latest announcement is the timing of the price cut, as by 27 February, it's hoped that most of the winter weather will have been and gone. British Gas customers will therefore still have to pay high prices during the peak season for energy use, and will only benefit when thermostats start being turned down.
That's why customers shouldn't wait – a rule that applies no matter which supplier you're with – as the money that can be saved by switching could far outweigh the eventual price reductions. Figures from energyhelpline.com show that customers could save as much as £405 by changing supplier, particularly those who switch from a standard tariff to a fixed rate, so why wait? Start comparing the options and see if you could save more than £37 a year…
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