British Gas announced that it is going to be cutting household gas prices by around 5%.
This is now the second price cut in six months that British Gas has made.
Annual energy bills are set to drop by an average of £35 as a result of the cut.
The company said that on August 27 there will be a price cut for 6.9 million British Gas customers on standard and “fix & fall” tariffs.
The lower prices are a result of lower costs, according to managing director Mark Hodges.
“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.
“There are a range of costs that make up energy bills, some decreasing and others increasing. 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.”
Is the price cut in response to the CMA report?
A year-long investigation by the Competition and Markets Authority (CMA) revealed that millions of energy consumers in the UK have been “paying too much for their energy bills”.
The CMA said that domestic prices for the big six were around 5 percent “above the competitive level” from 2009 to 2013, charging households £1.2 billion a year more than they would have in a competitive market.
When Mr Hodges was asked if the CMA’s report influenced the decision, he said that the timing came down to “being competitive in the marketplace”.
“There are always lots of things going on in the energy market. Certainly the CMA review is something we’re fully engaged in.”
The company was the first of the big six energy suppliers to respond to the drop in wholesale gas prices, according to MoneySuperMarket.com.
Over the next few days analysts expect the company’s major rivals, such as E.ON and Scottish Power, will also announce price reductions.