19th Jan 2015 12:28
LONDON (Alliance News) - British Gas, part of Centrica PLC, Monday said it will cut annual energy bills by 5% for 6.8 million customers from the end of February to reflect the recent fall in wholesale energy prices.
The 5% reduction in prices will save customers an average of GBP37 per year and will be rolled out from February 27, with the gas provider continuing to keep its prices under review for further movements, up or down, due to "the continuing volatility of wholesale prices", it said in a statement.
British Gas said that most of the gas being used in customers' homes today was purchased for higher prices in 2013 to 2014, but said wholesale costs for 2015 are now reducing to a level where it can pass the reduction down to customers.
"We?ve been watching the significant moves in the international energy market extremely closely for some time, with the aim of helping customers with a price cut at the earliest possible opportunity. Operating in such a volatile market, no pricing decision is straightforward," said Iain Conn, chief executive of Centrica.
"Taking this decision now, at a time of continuing uncertainty, shows our absolute commitment to pricing competitively, with customers at the forefront of our minds," he added.
The reduction will differ based on geographical regions, varying between a 4.9% reduction per year to a 5.2% reduction. The North of England and the South West will see the largest fall in annual energy prices.
The company said its dual-fuel costs in 2013 were made up of 47% on wholesale and energy costs, 24% on transmission and distribution, 9% on environmental and social policies, 6% on tax and VAT, 9% on operating costs and the remaining 4% was profit.
The breakdown is based on average annual consumption of 13,500 kilowatt hours across all regions and payment methods.
British Gas's decision to cut prices follows cuts by two other of the so-called Big Six energy distributors.
nPower has told customers who experienced a price increase in December 2014 that they will see their annual bill fall by around GBP33 across both gas and electricity from the end of February, alongside all customers receiving a universal rebate of GBP12.
Last week, E.ON said it was planning on reducing its standard gas price by 3.5%, the equivalent of two weeks' gas use or GBP24 off an annual gas bill.
The remainder of the Big Six are EDF Energy, Scottish Power and SSE PLC.
Centrica shares were down 0.3% to 264.17 pence per share on Monday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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