British Gas announces second price cut of £40 - total reduction of £207 this year

British Gas today announced a further cut to its standard electricity and gas rates for domestic customers with immediate effect. Its electricity rates fall by a further 6 per cent and gas rates fall by 3 per cent.(1)

Together with the decrease announced earlier in the year this second round of price cuts for British Gas customers reduces the average annual dual fuel bill by £207. This takes average prices down to £913 from £1,120(2) in just over six weeks. British Gas’ standard dual fuel tariff is now cheaper than the local supplier in every area of the country(3) and Click Energy remains the cheapest energy tariff on the market.(4)

This move follows the 12 March price cut which saw the company reduce standard gas prices by 17 per cent and electricity by 11 per cent.(5)

Since British Gas announced the March price cut in February, over 678,000 new customers have signed up, and it has seen overall net growth of its customer base since the start of April 2007.

British Gas' new Managing Director Phil Bentley said: "We want British Gas to offer the best value around. We’ve taken the lead on lower prices and we are committed to restoring our customer service to an industry-leading level. That’s why we’ve added an extra 800 people to our call centres, scrapped plans for the £5 late payment charge, and why we are reducing our prices again – and doing it immediately. Our two price cuts within the space of seven weeks will mean annual savings of £207 for our customers - while some of our competitors have failed to cut prices even once.  Since we announced our first price cut more than 678,000 customers have signed up to British Gas and we’re now growing our customer base.

"As well as being cheaper than our competitors, we are also greener: British Gas is the biggest supplier of green power to UK homes and our electricity has the lowest CO2 emissions of any major UK energy supplier."

Last month, British Gas also launched the UK’s largest social tariff, the Essentials Tariff, at a cost of up to £40 million per year.  Essentials will lower gas and electricity bills for up to 750,000 vulnerable customers – equivalent to the cheapest British Gas standard tariff.  Following today’s announcement prepayment meter customers who qualify for Essentials will have seen their energy bills drop by 28 per cent since 11 March which will mean an annual saving of £322(6).

As a further measure for customers seeking reassurance over volatile energy prices in the future, British Gas has updated its Price Guarantee 2008 product. At no extra premium and with no early exit penalty, customers who take this product are guaranteed British Gas’ new cheaper prices until 31 May 2008. The company is writing to all its existing Price Guarantee 2008 customers to confirm that today’s electricity and gas price cut will automatically apply to them.(7)

After this price cut British Gas will still deliver a sustainable margin in 2007 which enables it to make necessary future investments.

Dual Fuel prices at 26.04.07

Local Supplier Region Local
British Gas bill British Gas Saving (£)
Scottish Power Scottish Power £943 £847 £96
  Manweb £934 £839 £95
EDF Energy London £943 £816 £127
  Seeboard £934 £809 £125
  SWEB £969 £840 £129
npower(8) Midlands £981 £845 £136
  Northern £994 £857 £137
  Yorkshire £984 £850 £134
Powergen(9) East Midlands £941 £832 £109
  Eastern £941 £831 £110
  Norweb £951 £846 £105
Scottish and Southern Scottish Hydro £829 £827 £2
  Southern £840 £824 £16
  Swalec £859 £853 £6

Bills are based on industry average annual consumption of 20,500 kWh for gas and 3,300 kWh for single-rate metered electricity paying by monthly direct debit

Online Dual Fuel prices at 26.04.07
British Gas Click Energy 2 £755
Powergen £779
Scottish Power £773
npower £785
Scottish and Southern £787
EDF £857