British Gas has announced it will cut household gas prices by 5%, in line with recent falls in the price of wholesale gas, becoming the second supplier after E.On to comply with government expectations surrounding the issue.
Unlike E.On, British Gasís price reductions are not effective immediately, instead coming into play on 27 February. Its estimated 6.8 million strong customer base will see their annual bill reduced by an average of £37 as opposed to the £24 a year saved by E.Onís customers.
The unpredictability of energy prices is well documented, and British Gas insinuated that the majority of their gas was brought at higher prices in 2014, and thus the earliest they could implement the changes to their selling prices is the closing stages of February.
Iain Conn, chief executive of British Gasí parent company Centrica, said: ìWeíve 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.
ìWe 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.î
British Gasí decision comes amid political pressure focussed on encouraging Britain so-called ëbig sixí energy suppliers to provide consumers with value that reflects the precipitous drop in the price of wholesale gas and oil.
Only customers on British Gasí standard tariff and Fix & Fall tariffs will be able to access the savings, however those on fixed tariffs will be able to switch to one of the others cost-free.
David Cameron took the opportunity to hammer home the supposed judiciousness of his party in the face of Labourís alternative solution of freezing prices.
The prime minister said: “This is excellent news and we should be absolutely clear that this price cut would not be happening if we’d listened to Labour and put in place their 20 month price freeze. If we’d frozen prices, you would not have got this benefit to hardworking families up and down the country who want to see their energy bills come down – and with this news, that’s what is going to happen.”
However, critics have accused both E.On and British Gasí tariff reductions of being trifling when juxtaposed with the scale of wholesale gasí price fall. With wholesale gas costing 27% less than it did a year ago, many consider price reductions of 3.5% and 5% on the respective parts of E.On and British Gas, to not reflect the annual savings of over £100 consumers should be enjoying.
The remaining members of the ëbig sixí suppliers are expected to follow suit over the next week, but the question is will their price reductions be more consumer-orientated?
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