British Gas signalled last night that it could make its second gas and electricity price cut within a matter of weeks as the battle for household energy customers reached new heights.

Scottish & Southern Energy yesterday became the fourth supplier to promise lower bills nationwide as it revealed plans to reduce gas prices by 12 per cent and electricity by 5 per cent. The cuts, which are being phased in from today, will make SSE the cheapest on the market for most households.

However, British Gas immediately hit back by undercutting its rival’s online tariff, and Phil Bentley, managing director, promised further reductions for other customers “soon”. He told The Times: “We have led the market down and we are quite prepared to go again if this positive outlook for wholesale markets remains. In the last couple of years we haven’t been competitive. I’m the new managing director and I want to be competitive. I want to win customers back.”

The comments stunned industry experts even though many have been calling for price cuts for the past six months given sharp falls in wholesale energy costs.

Adam Scorer, campaigns director at Energywatch, said: “This latest price move downwards is a signal of intent that British Gas wants to slough off its reputation as the most expensive energy supplier. This is the kind of response consumers have been waiting for.”

British Gas is reducing its online ClickEnergy tariff by only 4 per cent, but this takes its dual-fuel rate for customers on the account to £755 a year, the cheapest on the market.

The company was the first to announce price cuts in the sector three weeks ago, promising to cut gas bills across its customer base by 17 per cent and electricity by 11 per cent. The cuts take effect on March 12.

Npower and Powergen have both followed suit but delayed the implementation of their own reductions until April 30.

The British Gas announcement overshadowed SSE’s plans, which were welcomed by consumer watchdogs.

SSE said that gas bills would fall from today and electricity rates would drop by April 1. Its price cuts would take average dual-fuel rates, excluding online offers, down by £89 to £873 – the cheapest standard rate.

SSE, which trades as Scottish Hydro Electric, Southern Electric and Swalec, poached a million customers from rivals last year by being the last to raise rates. It now has 7.5 million.

Alistair Phillips Davies, SSE energy supply director, said: “Since last September, we have made clear our intention to cut gas and electricity prices if there was a sustained fall in wholesale prices which would allow us to do so, and so I am very pleased that we have now been able to make this announcement.”

Only Scottish Power and EDF Energy out of Britain’s big six suppliers have still to cut rates. The former is expected to move within the next week.

SSE branded ‘cynical’ over price cuts policy

Scottish & Southern Energy was accused of “pulling the wool over customers’ eyes” despite becoming the first supplier to implement price cuts.

SSE lauded its decision to lower gas prices from today, saying that it enabled the group to beat the nearest challenger, British Gas, by a fortnight.

But hidden in the small print, SSE revealed that customers would only benefit from the lower gas prices once they have paid their next quarterly bill. If they had begun a new quarter earlier this week, they would have to wait nearly three months to take advantage of SSE’s cheaper prices.

SSE defended the move, but admitted its recent price rises had taken effect at the same time for every customer and not been rolled out gradually. “This was always historically how new rates were brought in. We are not hoodwinking anyone,” a spokeswoman for SSE said.

But one industry expert described the move as “incredibly cynical”. “Clearly they are more interested in poaching new customers than looking after their existing ones.”

Adding it up

Average annual dual fuel bill

Jan 05 Jul 07*

British Gas £717 £953
NPower £671 £920
SSE £629 £874
EDF £634 £971
Scot Power £667 £990
Powergen £653 £914

*Based on all price decreases announced to date

Source: USwitch.com

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