The price cut follows a 10% reduction in the company's gas prices, which took effect in February.
Together, the two changes should save more than seven million households with standard plans, including those with pre-payment meters, more than £130 on their utility bills.
However, the price cuts aren't enough to wipe out last year's increases when British Gas raised electricity prices by 26%, while the cost of gas went up a staggering 47%.
Market analysts, while welcoming the price fall, also point out that British Gas is following in the footsteps of the other big suppliers. E.On, EDF Energy, Scottish Southern, Scottish Power and Npower started providing cheaper electricity for their customers at the end of March - although none announced double digit cuts.
Scott Byrom, utilities manager at moneysupermarket.com said: "This move is great news for customers, making up for the fact British Gas only cutting gas prices in the first round this year.
"Households with an average consumption can expect to see a drop of £46 to their annual outlay, with standard bills falling to £1,199. And the good news for all consumers is that this may spark further reductions from the rest of the 'Big Six'."
Hopes that another round of price cuts could be in the pipeline were boosted by British Gas saying it was able to pass on this saving to customers due to a fall in the cost of wholesale electricity.
For dual fuel customers, the change also makes British Gas the cheapest provider, which is likely to prompt its rivals to retaliate with reductions of their own.
Byrom said: "British Gas' dual fuel price now stands at £1,018 on the WebSaver 3 tariff in comparison to an average of £1,072 across the other main providers, which is a saving of 5%."
The bad news, however, is that industry insiders expect the cost of wholesale electricity to increase again next year.
British Gas is also trying to appeal to consumers concerned about prices going up again with the launch of a new Websaver 3 package that offers customers at least a 6% discount on standard prices until August next year.
But this is not the only deal on the market to offer an element of security against future price hikes.
The best approach for consumers seeking lower bills is therefore to scour the entire market for the best possible deal.
"Ever-changing prices make it vital to search the market to see if you can save - especially if you are one of the 48% of Brits who has never swapped supplier," Byrom added.
Rate This Article
Click on a star to rate this article.
