British Gas announces 5% cut in electricity prices

Company claims cut makes it cheapest major electricity supplier but it won't be reducing gas prices at the moment.

British Gas has cut its standard electricity prices by 5% from today as the energy price war really starts to heat up.

It says that the cut will save its 5.3 million single rate electricity and dual fuel customers on a variable tariff £24 a year on average. It won't apply to people who are on Economy 7 or have already fixed their tariff.

British Gas claims that this cut now makes it the cheapest major electricity supplier in Britain.

But it says it hasn’t reduced gas prices because, despite wholesale gas prices falling at the moment, “the longer term trend continues to be upward”.

Back in August, British Gas raised its electricity prices by a whopping 16%, so it's debatable if any existing customers will see a noticeable drop in their bills.

SSE swiftly responded with a cut of its own, reducing gas prices by 4.5% from March. Check out this article for more on the SSE price change.

The British Gas and SSE cuts follow EDF's move to cut its gas prices by 5% yesterday in response to the falling wholesale price of gas. And it's more than likely that the rest of the 'Big Six' - E.ON, npower and Scottish Power - will now follow suit.

Smaller suppliers Ovo and Co-operative Energy have gone one step further by both reducing their dual fuel tariffs in recent weeks.

British Gas came joint ninth in a new customer satisfaction survey of energy suppliers conducted by Which?

Switch or wait

Despite the forecasts of further price drops, it's still well worth comparing rates and seeing if you could save.

If you haven’t switched tariffs in a while, chances are you are on the standard and most expensive rate. Changing onto a fixed or online tariff could cut your bills immediately. Yes, rates could continue to drop in the coming months. But if you do decide to stick on a pricey deal and wait around for them, you could see the excess you’re paying now outweigh any future savings.

So with that in mind, here are the current cheapest energy tariffs:

Source: energyhelpline.com

All tariffs are available through the lovemoney.com energy centre.

As you can see, there’s still as much as £315 to be saved by switching onto the market-leading tariff.

The best deal currently around is the online iSave tariff from first:utility. However with the top fixed tariff just £31 pricier on average, it may be worth foregoing the cheapest deal for the peace of mind of a year-long, set-price rate.

* All calculations are for an average usage duel fuel household paying by monthly direct debit. Average usage as defined by OFGEM is 16,500 kWh pa of gas and 3,300 kWh pa of electricity.

** Against a typical bill of £1,345 per year (source: Ofgem).

More: Compare energy tariffs with lovemoney.com | Four big gas and electricity scams to avoid this winter

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