British Gas cuts bills for the first time in six years

13 April 2012

British Gas is cutting energy bills for the first time in six years.

This ends a period of spiralling energy costs that has put pressure on household budgets and other gas and electricity suppliers are expected to follow this lead within weeks.

Britain's biggest energy group said its gas tariff would drop by 17 per cent and its electricity prices by 11 per cent from 12 March.

This will knock £167 off the average family energy bill bringing it back under the £1,000 mark to £953.

British Gas had already indicated that prices would come down in the spring but confirmation has come earlier than expected.

The company, which is owned by the giant energy group Centrica, said it was able to make the cut because of a sharp fall in gas prices on the international markets.

The warm autumn and early winter and the opening of a new gas pipeline from Norway means Britain is awash with gas compared with recent years.

British Gas is also desperate to halt the damaging loss of hundreds of thousands customers it has suffered in recent years.

The company today claimed it will be the cheapest supplier 'for the majority of UK energy customers' once the cuts come into force.

Phil Bentley, managing director designate at British Gas, said: "We are taking the lead in passing on the benefits of falling wholesale gas prices.

"As a result, our customers will be better off and for many vulnerable households which struggle to balance their bills, our social tariff will remove the burden of not being able to access our cheapest prices, typically direct debit, irrespective of their method of payment."

Sam Laidlaw, the Chief Executive of Centrica said: "The billions of pounds we have committed to gas contracts underpinned the construction of new undersea pipelines that are now delivering additional gas supplies to the UK."

Gas wholesale prices trebled between 2004 and 2006 from around 20p a therm to more than 60p a therm forcing gas companies to impose heavy price increases. They have since fallen back to around 45p a therm.

Last year was particularly bad because of the cold spring and the loss of Britain's biggest gas storage facility.

However, despite today's announcement, energy industry leaders have warned that energy prices are unlikely to fall as steeply as they have risen.

The last time British Gas announced a cut in gas prices was in April 2000 and its last electricity price cut was in April 2001.

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