Fuel bills are set to drop from April onwards when Scottish Gas introduces its plan to abolish standing charges for users.

The good news means customers could save more than £100 off their average annual bill.

The proposed cut follows pressure from the industry regulator Ofgem for suppliers to reduce prices.

Scottish Gas believes the change will mean a fairer "pay-as-you-use" system for its one million gas customers and more than 200,000 electricity users.

The overhaul of the billing system is the first major change to be put in place since the 1930s.

The Director of Scottish Gas, Jim Needham, said the company is glad to be the first national energy company to abolish the standing charge and adopt a policy that is fairer and clearer for customers.

In November, millions of gas customers in the UK were told their fuel bills were to fall by an average of £14 a year.

One-off price cut

Ofgem decided to impose the one-off price cut of 5% for customers of British Gas who do not pay by direct debit.

The watchdog said competition for people who pay by direct debit is already sufficiently developed.

It means 10.5m of British Gas Trading's 15.5m customers will benefit from the cut due to come into force in April.

Ofgem bosses also said they would be taking further steps in the new year to remove barriers to competition.

About seven in 10 homes still take their supply from British Gas, despite the introduction of competition.