Gas and electricity Updated:
In a surprise move, British Gas has announced that it's to cut household gas prices by 5%, equating to an average saving of £35 per year. It's the second time the supplier has reduced prices so far this year – its first reduction, also of 5%, came into effect in February – with the energy giant saying that, together, the two cuts will take more than £72 off an average dual fuel bill.
This latest reduction will come into effect on 27 August, six months after its first reduction and just in time for peak energy usage season. Hopefully, it'll mean British Gas customers won't face such excessive winter bills as they may have done, which can only be a good thing for household budgets.
Mark Hodges, managing director of British Gas, commented on the announcement: "British Gas is committed to offering competitively priced products, and the price cut we're announcing today demonstrates that. It's the second price reduction from British Gas this year, bringing bills down by an annual average of £72. This reduction reflects our lower projected total costs for 2015 and 2016 and we're pleased that customers will see the benefits in their gas bills ahead of next winter."
The move has been widely welcomed by the industry, and comes just a day after energyhelpline.com predicted that small reductions could be possible in the coming months, with price rises unlikely. The comparison site pointed out that wholesale prices have been dropping for over two years, with gas down by around 30% and electricity by 15%, and that if fully passed on, these reductions would lead to a further 5% drop in bills.
Well, it's come to fruition! The change will benefit all 6.9 million customers on the supplier's Standard and Fix & Fall tariffs, and they won't need to do anything – the price cut will be implemented automatically and will show on customer bills after 27 August.
Furthermore, those on other tariffs who want to benefit from the price cut can easily switch, with British Gas not charging any exit fees for those who want to transfer to one of their other tariffs. Just bear in mind that standard (or variable) tariffs are typically more expensive than fixed versions – you could overpay by hundreds of pounds per year, even with British Gas' cut – so make sure to thoroughly compare the options so you can be certain that you'll benefit.
However, this is where real change needs to happen, and more needs to be done if customers really stand to benefit. "While any price drop is welcome, we do feel that British Gas and other suppliers should be doing more, by cutting bills more quickly and by a greater amount," said Mark Todd, director of energyhelpline.com. "Really, standard price cuts are a phoney war. The real price war is in the switching market where bills are £200-£300 a year lower and you can get a yearly bill as low as £899."
So, why settle for an annual price cut of £72 when you could save as much as £300 per year by switching to a low cost fixed rate deal?! Some people could save even more, so check out our comparison tool to see just how low your bills could be.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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