The price cut will save customers an average of £88 a year and it comes on the back of recent falls in wholesale prices. The average annual bill for those with British Gas’ standard tariff who pay quarterly, will be around £1,240 – down from £1,328 currently.

The 10% reduction applies only to British Gas’ standard gas tariff. Its electricity prices will remain unchanged. British Gas customers with online tariffs will also see the cost of their gas fall, although the amount will depend on which product they have. New prices should be confirmed at the beginning of February.

Energy providers have been under mounting pressure to announce price cuts from the Government, the regulator, Ofgem, and consumers lobby groups to pass on price reductions to customers. Consumers saw their gas bills soar by an average of 47% last year, while electricity costs rose by an average 28%. These increases pushed millions of households in to fuel poverty – where more than 10% of the household income is spent on gas and electricity.

The refusal, up until now, by energy firms to announce price reductions has brought misery to many during the recent cold snaps. In a poll carried out by 17% of people said they’d not been able to use their heating to keep them warm because they can’t afford to pay for it. A further 33% said that although they had switched on the heating as and when they needed they are really worried about how they’re going to pay for the bill.

British Gas’ announcement will therefore come as a huge relief and analysts expect the other five major energy suppliers – E.ON, EDF Energy, Npower, Scottish Power and Scottish & Southern - to follow suit in the coming weeks.

Scott Bryom, utilities expert at, said: “British Gas has thrown down the gauntlet to the rest of the ‘Big Six’ but as far as bill payers are concerned a 10% drop does little to compensate for the record price increases in 2008. We now expect a flurry of activity in the energy market with other providers moving imminently in response.”

Don’t switch provider just yet…

Byrom added: “My advice to consumers is to sit tight and see how other energy giants react. Gather together all the information about your current provider, tariff and consumption so that you are ready to move to the best value deal once all of the ‘Big Six’ have shown their hands.”

With energy prices on their way down, you may think there is no need to change provider as your bills will fall. But millions of households could make further savings by switching tariff and changing payment method. If you are on your provider’s standard tariff and currently pay quarterly by cash or cheque, could cut you annual bill by around £200 by switching to an online deal and paying monthly by direct debit.

The exact saving will depend on where in the country you live and how much energy you use, but our gas and electricity comparison tool provides an easy way to compare providers and find the cheapest deal for you.

How do the energy providers currently compare?

The table below illustrates the savings that can be made by switching from a standard tariff to an online deal.





British Gas

From 19th February 2009


Web Saver 1 



Price Protector 2010

Sol 14

EDF Energy


Annual Fix Version 1

Online v.6



Fixed Price 2010

Energy Online Extra Saver 12

Scottish & Southern



Standard Enerrgy Online

Scottish Power


PriceSure Energy

PriceSure Online

Sourced by January 22, 2009.