British Gas has cut electricity prices by an average of five cent but said there would be no reduction in gas prices, which it claimed were still rising in the long-term.
The price cut, which will benefit more than five million customers, will take effect immediately and will knock £24 from the average household’s bill.
SSE quickly followed suit and announced that it would also make price cuts, with the cost of a domestic gas bill going down by an average of 4.5 per cent from March.
The moves follow an announcement yesterday by French-owned rival EDF to cut gas prices by five per cent. Other operators are expected to do the same.
Ian Peters, managing director of energy at British Gas, said: “We want to keep prices as low as possible. Household budgets are stretched and we are doing everything we can to help our customers keep their bills down.”
However, bills for many customers will still be higher than they were before British Gas increased electricity bills by 16 per cent in August. It increased gas bills by 18 per cent in the same month.
Cash-strapped households were also hit by price increases from the remaining five of the six big energy suppliers over the summer.
But recent reductions in wholesale energy prices have led to calls for suppliers to reverse hikes.
Mark Todd, director of the independent price comparison service Energyhelpline, said: “We believe there is room for price cuts of up to ten per cent because of the recent dramatic falls in wholesale prices but clearly the major suppliers do not feel they have the necessary leeway to go much further than five per cent.
“This may be because they are worried about their profits but also because they genuinely think that wholesale prices could go back up and that investment in green energies is limiting their room for manoeuvre.”