British Gas cuts online bills again

By REUTERS
Updated:

 

The energy price war heated up further today as British Gas announced more cuts for online customers, just 24 hours after Powergen guaranteed to beat its prices in some areas of the country.

Kettle on the boil

British Gas - the largest domestic energy supplier, with 10m gas customers and almost 6m electricity accounts - said it would trim its online Click Energy 2 tariff to ensure it remained competitive.

This means British Gas can continue to boast that it offers the cheapest tariff in the UK, albeit available only to customers who apply online.

Powergen yesterday announced special deals guaranteed to undercut British Gas's standard tariffs for the next 18 months. Powergen said its Energy Online Extra Saver would become the cheapest in eight of the 14 energy regions across the country. The cuts did not extend to existing Powergen standard tariff customers, though the supplier said cuts to their bills would be 'due shortly'.

Another supplier, npower, is expected to announce cuts this weekend.

Today's cuts mean British Gas is once again the cheapest across the country for online tariffs. Its Click Energy 2 tariff will cost an average £306 per year for electricity customers, £494 for gas customers and £785 for dual fuel from the second week in March. These figures are about £3 cheaper than the prices announced last week by British Gas announced.

The price war has been triggered by the dramatic fall in wholesale gas prices since new pipelines from Norway and the Netherlands came into service last autumn.

British Gas said last week it would cut its standard residential tariffs by 17% for gas and 11% for electricity from March 12. Today it said: 'We want to remain competitive in the market. Our Click 2 tariff is the best rate you can get with British Gas and this (price reduction) helps us to do that. It keeps us very competitive in the switching site tables.'

Graham Self, director of price comparison service UKPower.co.uk, said: 'It shows that British Gas has brightly and clearly woken up from its old monopolist slumber into the new world of super-competitive energy pricing, powered by the ready availability and ease of switching online.'

Paul Green, chief executive at comparison business energyhelpline.com, said: 'As a result (of this cut) customers who have never switched could save on average 20%. We expect the other major suppliers to follow suit within the next couple of weeks.

'However, this price war is not all good news for consumers. The worrying thing is that so far seems to be about grabbing new customers rather than bringing lower prices to existing customers.

'Both British Gas and Powergen clearly want to claim to have the lowest prices. However, the rates that new customers get for signing up to either the British Gas or Powergen online products are much lower than the prices that existing customers will be offered even after price falls on their current tariff.'

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