The decision comes in the wake of British Gas recently announcing a 10 per cent cut in standard gas prices with effect from February 19.
Scottish & Southern Energy (SSE) also supplies energy under the brand names Southern Electric, Swalec, Scottish Hydro Electric and Atlantic.
“Dual fuel" customers with the utility company would see an average annual saving of £66, the company said.
It added that the wholesale price of fuel to be delivered over the winter months almost halved from 109p a therm to 63.6p, allowing it to deliver the price cut.
The other four big energy firms – E.ON, Scottish Power, Npower and EDF Energy – are expected to announce price reductions in the coming weeks.
However, with such a huge drop in wholesale costs, there are question marks over whether or not energy suppliers should be passing on bigger reductions, particularly as prices soared last year.
Scott Byrom, utilities expert at moneysupermarket.com, said: “As far as bill payers are concerned, this drop does little to compensate for the record price increases of 2008 (47% for gas and 28% for electricity), and these are the prices they’ll be paying for the heating used during the recent big freeze.
“Although a decrease is certainly a step in the right direction, British households have already paid through the nose for their winter energy consumption. Nevertheless this is a much needed cut that will help those whose purse strings are under pressure. Many consumers will hope that there will be further price cuts on the horizon and with four more energy giants to show their hand, we can expect more providers to respond with similar reductions.”
What should consumers do?
With bills coming down, many people may think there is no need to take any action with regard to their energy provider. However, this is not the case. Around half of all households have never switched their gas or electricity supplier. As a result they are paying their provider’s standard rate. Even though these prices are likely to fall in the coming months, further savings could be made by taking the opportunity to switch to a cheaper deal.
The cheapest option is to opt for an online tariff and pay for your gas and electricity by monthly direct debit (as opposed to quarterly by cash or cheque). Households could save an average of £200 a year by switching from a standard to an online deal.
That said, the advice is not to switch just yet. With the other energy providers expected to follow British Gas and SSE’s lead and cut their prices, it’s worth holding fire for a few weeks. Once they have all announced their new prices we will be back to a level playing field. Then will be the time to switch provider and maximise savings.
As Scott explained in his article ‘Get ready to switch your energy provider’ it’s really straightforward to change your supplier. The deal that works out best value for you will depend on your consumption and where in the country you live – you can find this out easily by inputting your details into our comparison tool.
You can cut your gas and electricity bills further by becoming more energy efficient. Simple things such as turning your heating down by 1°C and having a shower rather than a bath can knock a significant amount off your annual energy bill. For more tips on how to reduce the amount of energy you use, read our article ‘How to save energy and slash fuel bills’.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.