British Gas said it is to cut household gas prices by 5%, which on average will reduce people’s bills by £37 per year. The Centrica-owned company says the 5% reduction to standard tariffs will benefit about 6.8 million customers as from February 27th, 2015.
The price reduction reflects the recent decline in gas prices, even though most of the fuel customers are currently using was purchased at higher 2013/14 prices. Wholesale costs for 2015 are now falling, which means the company can afford to offer discounts, British Gas, the UK’s largest energy supplier, said.
Iain Conn, Chief Executive of Centrica plc, said regarding today’s announcement:
“We’ve been watching the significant moves in the international energy market extremely closely for some time, with the aim of helping customers with a price cut at the earliest possible opportunity. Operating in such a volatile market, no pricing decision is straightforward.”
“We bear the responsibility of managing the risks of buying energy ahead on behalf of our customers, who value the predictability this brings. Taking this decision now, at a time of continuing uncertainty, shows our absolute commitment to pricing competitively, with customers at the forefront of our minds.”
British Gas and other energy companies have been under pressure from lawmakers, consumer groups and regulators to reduce their prices. (Image: Centrica)
British Gas Interim Managing Director Ian Peters said the price cut will help households keep their energy costs down at a time when many people’s budgets are still under pressure.
Mr. Peters added:
“We know customers expect competitive pricing and good value from British Gas and we continue to keep our prices under constant review. We have a range of competitively priced products, fixed and variable, to suit customers’ needs and preferences.”
“We’ll also continue to lead in the development of innovative products and technologies to put customers in control of their energy usage and help them keep their energy bills as low as possible.”
Prime Minister David Cameron wrote on Twitter: “It’s welcome to see British Gas cutting prices. We’ll continue to encourage energy firms to pass on falls in wholesale prices to customers.”
Ian Peters was appointed Interim Managing Director, British Gas, on December 1, 2014. (Image: Centrica)
Chancellor George Osborne wrote, also on Twitter: “Good British Gas cutting prices. Real progress. Need to ensure falls in wholesale prices passed on so will continue to monitor very closely.”
Last week, Big Six rival E.ON announced it was cutting gas bills by 3.5% as from January 13th. Most experts expect the other energy giants to follow suit soon.
The Labour Party wants to give government regulator Ofgem the power to force energy companies to pass on declines in wholesale oil and gas prices to consumers.
