HOMEOWNERS received some much-needed cheer today after British Gas cut its prices for the first time since 2000.

The energy supplier, which is part of Centrica, will cut standard tariffs for gas by 17% and electricity by 11%.

As a result, the average annual dual fuel bill for its customers will fall by é167 to é953.

The price cuts, which come into force from March 12, represent the first such move by a major power supplier following a series of price hikes.

British Gas has increased gas prices on seven occasions since 2002, with electricity tariffs rising six times. It last cut prices in spring 2000.

Centrica said it was able to act today because average wholesale gas prices this year were almost half the level seen during 2006.

The decrease follows the opening of new gas pipelines into the UK from Norway and the Netherlands, as well as the impact of a previously mild winter.

The company said British Gas was now the cheapest gas supplier for the majority of UK energy customers.

Increase

The business has 16 million gas and electricity customers after 978,000 accounts were cancelled in the wake of a huge increase in energy bills in March and again in September.

Chief executive Sam Laidlaw today defended the decision not to pass on the whole of a 50% drop in wholesale prices on to customers.

But he pledged that any further falls this year would be reflected in lower bills.

He said: "We don't go and buy our gas purely on a day-to-day spot basis - we go out and have to buy our gas on a long-term basis,"

Mr Laidlaw said new undersea pipelines were now delivering additional gas supplies to the UK.

He added: "These new supplies of gas have directly led to the fall in wholesale prices which we can now pass on to our customers. Our price cut still enables British Gas to make a sustainable margin in 2007 and allows for further investments in the future.

Scottish & Southern Energy, which operates brands including Southern Electric, recently told its customers that it expected to cut its prices.

Tweet