A welcome move as British Gas cut tariff - but still more to come on household bills.

British Gas’s decision to cut domestic energy tariffs has been welcomed by Peopleschampion.com - but consumers are advised to keep looking at their domestic bills. More is on the way, predicts Jim Spowart, the chairman of Peopleschampion.com.

From 12 March 2007, British Gas is set to become the cheapest energy supplier for gas, dual fuel and online tariffs. But with all other major suppliers set to announce price cuts in the immediate future will this be short-lived?

Prices will fall by:

• 17% or £120 for gas - from £707 to £586
• 11% or £47 for electricity - from £428 to £381
• 15% or £167 for dual fuel - from £1,120 to £953
• But British Gas will still be fourth-most expensive out of the big six.

British Gas is the first major energy supplier in the UK to announce a reduction in its tariffs for residential gas and electricity customers. From 12 March 2007, British Gas will cut its standard gas tariffs by 17 per cent and electricity by 11 per cent. As a result, the average annual dual fuel bill for its customers will fall from £1,120 to £953.

The announcement came after the Prime Minister added his voice to the debate during Prime Minister’s Question Time after another minister raised concerns about the impact that fuel prices are having. He was responding to former Labour minister Tom Clarke (Coatbridge, Chryston and Bellshill) who called for reductions for “long-suffering consumers” as wholesale prices had fallen by a staggering 50% since last April.

British Gas has the largest number of domestic customers: around 10 million for gas and just under 6 million for electricity. It had been the most expensive supplier charging 16.4% or £158 more than the cheapest available supplier for its standard tariffs. The company has a long standing history of charging premium rates – in fact, only recently the new Chief Executive of British Gas’ parent company, Centrica, acknowledged that “the [British Gas] brand continues to command a premium”.

So, while the news is undoubtedly a welcome respite for the company’s customers, Peopleschampion.com, which compares prices and helps consumers switch users, urges a word of caution, as it expects other suppliers will swiftly follow British Gas’s lead by offering further price cuts and even more competitive tariffs.

Jim Spowart, chairman of Peopleschampion.com, said: “It’s a great start. The news that British Gas, the UK’s biggest energy supplier, has cut their prices by as much as 17% for gas can only be congratulated.  Customers will now see their bills fall by as much as £167 for dual fuel. But some consumers might be sayings its long overdue after six and a half years of waiting.”

“Peopleschampion.com sees that British Gas retail energy is on track to make £224 million profit since June 2006, up from £143 million loss in the first half of last year after inflicting two inflation-beating price rises on its customers during the same period. That’s a lot of profit without payback to loyal customers. It is good to see the company has chosen to play fair by its customers rather than playing to its own agenda.

“We expect all other suppliers to swiftly follow suit as we see a price war set in. Whether British Gas will retain its crown as the cheapest for gas and dual fuel for long will be for other suppliers to decide.

“However, for those already in fuel poverty, this move from British Gas really could be ‘too little, too late’. British Gas price rises in 2006 are estimated to have pushed almost 457,000 people into fuel poverty. We estimate that every 1% decrease in its gas prices will pull just over 12,000 customers out of the fuel poverty pit, while every 1% decrease in its electricity costs will help just over 4,000 people out of fuel poverty. In order to rectify the damage inflicted by the company to over 400,000 people by last year’s soaring fuel bills British Gas would need to drop its overall prices by 24%.”

“As the largest supplier in the UK, British Gas has a responsibility to monitor its pricing and to understand the impact its prices have on consumers and the economy as a whole. The reductions will bring much-needed respite to British consumers. We can only watch to see now what the domino effect will bring as other suppliers follow suit,” said Mr Spowart.

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