British Gas cuts electricity prices: will others follow?
1:55pm Thursday 7th May 2009
- British Gas cuts electricity prices by 10% today making it the cheapest electricity supplier in the UK
- The price cut affects 4.5 million customers, making rates as much as £111 lower than the local electricity supplier
- Following the gas cut from earlier this year, British Gas customers will save £132 on average on dual fuel bills this year
- Average household bill for a dual fuel British Gas customer will now drop from £1,240 to £1,194 - £282 or 31% higher than its average bill of £912 on the 1st January 2008
- British Gas’ Websaver 3 product is now the cheapest online plan on the market falling from £1,034 to £1,019
- British Gas increased prices by £416 or 46% last year
- Overall, suppliers put prices up last year by 42% or £381, adding £4.3 billion onto household energy bills.
Is this the sign of things to come? British Gas’ announcement today that it is cutting electricity prices by 10% will be a boost to customers struggling to pay their bills in the current climate.
The cut follows the company’s 10% cut on gas prices, which took effect on 19 February this year and as a result of these, British Gas customers will save on average £132 in total on their annual household energy bill.
The move means that British Gas is now the cheapest electricity supplier in the UK.
It has also brought out Websaver 3, which is the cheapest online energy plan on the market.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “This cut will be some relief for those British Gas customers who are struggling to pay bills - it makes British Gas cheaper than any other electricity supplier in the UK, and it also means that they’ve got the cheapest online plan. This is giving choice to consumers, who had to deal with a 42% increase in energy prices last year.
“Rather than holding out for further price cuts, consumers should help themselves now by making sure they are paying the lowest possible price for their energy and learning to use less of it. Moving to dual fuel, paying by direct debit and signing up to an online plan will all help save money – in fact switching to a competitive plan could put your energy bill by up to £350. British Gas is helping consumers with this by offering the cheapest online plan on the market.”
British Gas increased its prices by 46% or £416 during 2008. Its average household energy bill at the beginning of 2008 was £912. After today’s cuts it will be £1,194 - £282 or 31% higher than a year ago.
1. British Gas pricing announcement 7th May 2009
2. Based on a customer using 3,300 kWh of electricity and 20,500 kWh of gas, on a standard Dual Fuel plan, paying on receipt of bill with bill sizes averaged across all regions. Average British Gas Dual Fuel bill as at 1st January 2008 was £912. At the 1st January 2009 it was £1,328. Following today’s announced price cut it will be £1,194, which is 31% or £282 higher.
3. British Gas Websaver 2 was £1,034, the new Websaver 3 is £1019. The different between the old bill size and the new one is £15 or 1.5%. As a result this is the cheapest online product on the market.
4. Customer using 3,300 kWh of electricity and 20,500 kWh of gas, on a standard Dual Fuel plan, paying on receipt of bill with bill sizes averaged across all regions. Average Dual Fuel bill as at 1st January 2008 was £912. Following the first round of price rises by all big six suppliers, the average dual fuel bill was £1,048 - a 15% increase. This added £1.5 billion onto household bills - calculated by multiplying the average £136 increase by the total number of UK Dual Fuel households taking a standard plan (11,565,078) - based on YouGov research December 2007. The second round of price increases took annual bills to £1,292 - a 23% increase. This added a further £2.8 billion onto household bills - calculated by multiplying the average £245 increase by the total number of UK Dual Fuel households taking a standard plan (11,565,078) - based on YouGov research December 2007. To get the total added onto household energy bills this year, £1.5 billion and £2.8 billion were added together.
5. Between 1st January and 30th September 2008, at least 14% of people who switched dual fuel energy provider with uSwitch.com saved £350 or more.