British Gas cuts electricity prices by 10%
This morning, British Gas has announced it will reduce standard electricity prices by an average of 10%. The price cut will take effect immediately, and the company says it should benefit 4.5 million households.
What about gas?
British Gas hasn’t announced any change in the price of gas today. However, it did reduce gas prices by 10% earlier this year – a cut which took effect on 19 February.
Is British Gas now the cheapest energy supplier for me?
According to British Gas, its combined electricity and gas price cuts mean it is now, on average, the cheapest energy supplier in the UK for customers who pay by direct debit.
The company says its electricity rates are now up to £111 lower than those charged by its competitors – and that, on average, it is now the cheapest electricity supplier in Britain.
British Gas customers will enjoy an average saving of £132 on their annual dual fuel bills when both its gas and electricity price reductions are taken into account. According to the supplier, the average annual dual fuel bill for a British Gas customer is now £1,127.
However, British Gas’s 10% reductions in gas and electricity prices apply specifically to customers on standard tariffs.
Generally, these are more expensive than the cheapest online deals – which British Gas says will be cut in price by between 5% and 10%.
Will other energy suppliers now cut their prices, too?
It is possible that today’s surprise decision by British Gas will prompt the rest of Britain’s ‘big six’ energy suppliers to re-think the rates they charge their customers for electricity.
While British Gas’s competitors have all cut the cost of electricity to their customers since the start of 2009, no other company has offered a reduction as high as 10%.
The wholesale cost of energy has fallen dramatically since last summer, when all of the UK’s major energy suppliers imposed hefty price hikes on their customers.
However, companies take into account their own profitability when calculating the cuts they can afford to offer consumers – and with the recession now biting, it remains to be seen whether the rest of the big six can (or will) match British Gas’s latest move.
Should I switch to British Gas?
Today’s announcement should certainly prompt consumers to consider switching their energy supplier. If you have never switched or have not done so for some time, it’s likely you are paying over the odds for your gas and electricity – and you could save up to £391 a year by switching to a cheaper supplier*.
However, it is worth ensuring that British Gas really is the cheapest supplier for you before signing up with them. Bear in mind that the amount of energy you use each year, where you live and the payment method you choose will all influence how much you pay for your gas and electricity.
Therefore, it’s important to compare the tariffs on offer from a variety of energy providers before committing to one company. This is the best way to ensure you’re getting the cheapest possible deal on gas and electricity.
* The saving of £391.42 relates to a high end user with postcode NR3 2BH (28000 kWhs gas and 4950 kWhs electricity), if the customer has moved and is making quarterly payments. Effective as of 14/10/2008.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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