British Gas said today it would cut residential gas prices by 10% next month, sparking hopes that the move will put pressure on other suppliers to follow suit.
The company, the biggest gas supplier to the UK residential market, said the move would benefit 7.5m households and save £84 on average household gas bills. The cut will not affect customers on fixed-rate deals or those who only buy electricity from British Gas.
Though some observers described the move as a welcome first step, there was disappointment the company had not gone further in reversing last summer's 35% rise in gas bills, which itself followed a 15% increase last January.
Phil Bentley, British Gas managing director, said wholesale gas prices had almost doubled last year and the market had been very volatile. "We buy gas months before it is used so we can make sure we always have enough for our customers, and can protect them from sudden rises in wholesale prices," he said.
Bentley said the company understood that energy bills represented a "significant cost" for customers. "This price cut will go some way towards helping customers manage their budgets and we will continue to do for them what we can, when we can."
British Gas rejected suggestions from some of the company's competitors that the price cut simply represented a "catch-up" move. It said British Gas had not cut electricity prices because wholesale prices had fallen more slowly and it had increased electricity bills by less than gas prices last year.
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