British Gas cuts bills by 7%

4 February 2010

British Gas has cut gas bills by an average of 7% - its first reduction since February last year.

The largest residential energy supplier in Britain says the price cut will benefit eight million households, with average customers saving £55 a year.

British Gas last cut gas prices in February 2009, by 10%. In May last year it also cut its electricity prices by 10%. Read more

However, in 2008, gas prices were hiked by 50%. Electricity prices, meanwhile, were increased by a total of 24%.

Phil Bentley, managing director of British Gas, says the latest cut means the company is now the cheapest major supplier of standard gas at average consumption - and therefore of dual fuel - across Britain.

"At British Gas, we know household budgets are stretched, and that our customers are concerned about the effect the recent cold weather will have on their winter fuel bills,” he adds.

"I'm pleased we're able to offer our customers some extra help with this gas price cut - and that we're able to do this while it's still winter, allowing our customers to really feel the benefit.”

British Gas also recently removed the price ‘differential' for gas pre-payment meter accounts. This means British Gas pre-pay gas customers are now paying, on average, the same for their energy as customers who pay by cash or cheque.

What next for energy bills?

According to uSwitch, the latest gas price cut will see average British Gas bills drop from £1,202 to £1,147. However, this equates to £235 (or 26%) more than the average bill of £912 in January 2008.

British Gas is the first supplier to cut prices this year, but Ann Robinson, director of consumer policy at, says it won’t be the last.

However, over the long-term, households can still expect to see their energy bills increase.

A recent report from Ofgem, the energy regulator, warns that energy could become unaffordable for many in the future, with investment costs pushing bills up by 25% to over £1,500 within the next 10 years.

“If British Gas’ move is an indication of what can be expected from other suppliers, consumers can still expect their household energy bills to be around £270 higher than just a couple of years ago - even after price cuts,” adds Robinson.

Ofgem warns that far-reaching energy market reforms are needed in order to ensure energy supplies are sustainable, and affordable, beyond the middle of this decade.

Christine McGourty, director of Energy UK, says: "The UK's energy companies have a difficult balancing act to perform. They are making huge investments in the nation's infrastructure to provide the energy we need for the future, while also working to keep energy prices affordable for their customers.”

Unless £200 billion is invested in infrastructure, increasing numbers of households will not be able to afford adequate levels of energy to meet their requirements, according to Ofgem. 

Mark Greening, head of utilities for, says: “British Gas may be the first of the energy giants to cut its bills following almost a year of lower wholesale gas prices but it’s highly likely that others will now follow suit.

"However, with the recent severe weather and Ofgem indicating that a price hike will be needed to fund vital infrastructure improvements, these lower prices may be short-lived."

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