British Gas has cut electricity prices with immediate effect by an average of 10%. However, the move only serves to put right the energy giant's failure to slash prices earlier this year.
Energy experts are split on whether we will see further drops so if you’re already on a cheap tariff, it may be worth waiting before switching, in case other suppliers cut costs.
British Gas cut gas prices by 10% in February but was the sole representative of the big six firms, until today, not to lower the price of electricity during the round of cuts earlier this year.
That was despite wholesale prices – what power firms pay to buy the energy they sell to us – having dramatically before then. Even now, the latest cut is an average so not everyone will get the full 10% reduction.
British Gas, the largest domestic electricity supplier in Britain, said the average dual fuel (gas and electricity) customer would see bills fall by £132 a year to £1,127.
Wholesale gas prices have fallen by over 50% since their peak in July last year, while the price firms pay for electricity has fallen by almost 50% between July last year and February 2009, according to price comparison site Energyhelpline.com.
Despite the price cuts for consumers, critics argue we're still paying far too much for our energy because wholesale prices have dropped much further.
Many power providers have yet to cut their gas prices and where energy prices have come down, they’ve dipped by no more than 10%, regardless of which supplier you're with. Last year, energy prices sky-rocketed by up to 50%.
Over 40 MPs have signed an Early Day Motion in Parliament calling on energy firms to cut costs for consumers because of the huge wholesale price cuts.
Energyhelpline expects British Gas’s rivals to cut electricity costs because it is now the cheapest electricity-only and dual fuel provider on average. Fellow comparison site uSwitch.com does not expect prices to fall further.
Archna Luthra, energy analyst at MoneySavingExpert.com, says: "It's unclear whether or not this is the start of a new round of price rises or British Gas catching up on the last one.
"If you're paying over the odds now, it's worth switching. If not, in a few weeks might get you an even cheaper tariff, so wait."