British Gas cuts prices for second time in two months
May 1, 2007 at 3:23 am
The UK’s largest domestic energy supplier, British Gas, has announced a 3% reduction in gas prices. This follows hot on the heels of the last cut (in March 2007) and is good news for the company’s eleven million gas customers. British Gas claims that annual savings for householders will be as high as £207, although this figure applies to customers who buy their gas ”’and”’ electricity from the firm (electricity prices are also set to fall, by a more substantial 6%).
Supply
The price cut is due at least in part to falling wholesale prices, which are having a greater impact on the domestic gas consumer than ever before. The UK, as a net importer of gas in an increasingly globalised energy economy, feels the effect of price fluctuations particularly strongly. Shortages and political unrest can see gas prices sky-rocket. Recently, the pressure on the UK supply was relieved a little by the opening of the Langeled gas pipeline, which began transporting Norwegian gas to the UK in autumn 2006. A hike in energy wholesale prices, though, is still a real possibility and could herald a reversal of the price cuts announced this week.
A competitive market
Alistair Buchanan, CEO of the regulatory body, Ofgem, said this week that Britain’s energy market remains highly competitive. Commenting on the British Gas cuts, he said: Competition is all about customer power – in a market where over 600,000 customers switched in the first two months of this year any supplier that tries to buck the market by not lowering their prices or failing on service risks an exodus of customers. With the bad press British Gas has had in recent months, that message certainly rings true.
Adam Scorer, of consumer body Energywatch, sees the cuts as a coup for the consumer: ””Lower wholesale prices give the green light to all suppliers to undercut each others’ prices and really compete for customers. They have no excuse for doing nothing.””
A good time to switch?
With British Gas widening the price gap between itself and other major suppliers, expect further price cut announcements in the coming weeks. Powergen, Staywarm, Npower and Juice are due to slash prices by up to 18% come April 30th, so don’t assume that you are better off sticking with British Gas just because of this most recent cut.
As ever, the best advice is to wait until the dust settles in a few weeks, and then shop around to get the best deal. There are big variations in prices, even if your own supplier has announced price cuts you may still find a better deal elsewhere. And may suppliers offer incentives to switch. Keep up to date with latest price rises and cuts, on the Money Saving Expert site.
