British Gas cuts rates by 7%

British gas has announced a cut in gas prices for its customers. Who benefits, and is it the start of a price war?

What's happened?

British Gas has today announced it is to cut its standard gas prices by 7%, a move it claims will see customers saving around £55 a year on their energy bills.

Who's going to benefit? 

According to British Gas, up to eight million people across the UK will benefit from the move.

The price cut will not just help those customers on the standard tariff itself - customers on tariffs like the OnlineSaver and WebSaver 6 will also benefit, as they are guaranteed a 3% and 6% discount from the standard tariff until next May.

Will other companies follow suit?

The million dollar question. Cutting prices in this way is likely to increase pressure on the other members of the energy market's Big Six - E.ON Energy, EDF Energy, Npower, Scottish Power, Scottish and Southern Energy - as when one cuts prices, the others invariably follow.

Ofgem's warnings yesterday about the increased likelihood of energy bills reaching £2,000 a year will only add to that pressure, though a price war is unlikely - cuts of this size, particularly on gas alone rather on both gas and electricity, are cosmetic in nature and will make only a small difference to the majority of customers.

There will likely be cuts by other providers, but on a very small scale.

Should you switch now

If you are on a standard tariff, undoubtedly - these are considerably more expensive than the far more competitive tariffs all of the providers offer online. However, that doesn't mean you should automatically switch to British Gas, as the tariffs on offer may not be the best option for you in your region.

Instead, use lovemoney.com's energy quote engine to find out which tariff is the best for you and your energy needs. The average saving reported by lovemoney.com users who have taken advantage of the tool is a whopping £215!

Compare energy quotes at lovemoney.com