British Gas to cut charges by 10%

British Gas is planning to reduce its gas prices by 10% in a move that is expected to reduce the average household bill by £84 a year. The rest of the “Big Six” are expected to follow suit over the coming months.

The BG cut will benefit more than 7.5 million homes when it is introduced in February 19. The reductions will not apply to the 2.7 million British gas customers that are on fixed tariffs as prices are typically fixed for two or three years.

Energy providers have been under pressure from energy regulator Ofgem to reduce household gas and electricity bills in line with the falling price of world oil, which the cost of wholesale gas is directly linked to.

In July 2008, BG, owned by utility company Centrica, raised its gas prices by a record 35% while other companies lifted their prices by more than 20%. This means that the proposed reductions will still leave customers paying more than before that initial increase.

Scottish and Southern Energy, the UK’s second largest energy supplier, said in November that it planned to cut household bills early in 2009.

BG also plans to introduce a prompt payment discount of up to £15 per year for customers on standard gas tariffs who pay quarterly from February 19.
Households that pay within 15 days or by direct debit will have their bills automatically reduced.

The company has also suggested plans to encourage customers to install energy saving devices in their homes, which will help cut costs even further.

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