Page last updated at 23:33 GMT, Thursday, 4 March 2010

Scottish and Southern Energy cuts gas bills

Gas rings
British Gas cut its gas prices for domestic customers recently

Scottish and Southern Energy will cut its gas bills for domestic customers by 4% from 29 March, the company has announced.

The average annual household bill will drop by £30 as a result, the energy provider said.

The move comes a month after British Gas cut its standard household gas prices by an average of 7%, and others are expected to follow suit.

The changes come after a period of lower wholesale costs.

The company said that its average dual fuel standard credit bill would stand at £1,162, although prices alter depending on where people live in the country.

'Challenging business'

Scottish and Southern has 3.5 million gas customers but nearly 10 million customers across the UK who use gas or electricity or both. Electricity prices will remain unchanged.

We will never get back down to levels enjoyed a few years ago
Tom Lyon, Uswitch

It supplies gas and electricity as Southern Electric, SWALEC, Scottish Hydro, and Atlantic.

Those customers who have relatively low gas usage will not see the full effect of the price cuts. Fixed charges - the initial charge for the first tranche of gas used - will increase from £53 to £98. Prices will be cut for gas used above this level, leaving a net effect of a 4% cut for the average customer.

"Energy supply is still a challenging business, with significant upward price pressures which run counter to reductions in wholesale costs," said Alistair Phillips-Davies, the company's energy supply director.

"We will do everything we can to make sure customers get value for money from energy supply, with energy efficiency and customer service continuing to be top priorities."

The company has also followed demands from the regulator and consumer groups by removing the price differential for pre-payment gas meters.

Pre-payment meter customers will see their annual bill fall by 9%, or £70 a year on average.

"This is a great day for social justice and means that almost 300,000 people, many of whom are on lower incomes, will now find it easier to pay for their energy and heat their homes," said David Orr, of chief executive of the National Housing Federation.

Single fuel gas rates will fall by 7%, or £56 a year on average, moving single fuel gas prices in line with dual fuel.

Other suppliers

Gas providers have come under pressure to cut bills after prices that they pay on the wholesale markets fell.

Gas prices graph

The latest moves by Scottish and Southern and British Gas should push the others in the "big six" energy suppliers into cutting prices, according to Tom Lyon, energy expert at price comparison website Uswitch.

"Hopefully the other four will follow shortly, which can only be good for customers," he said.

"But we will never get back down to levels enjoyed a few years ago."

The falling prices were still relatively small compared with the increases across the market in 2008, he said, and there was little likelihood of any drop in electricity prices.

Robert Hammond, energy expert at watchdog Consumer Focus said: "This is good news and hopefully will spark the price war that has been conspicuous by its absence since British Gas cut its gas bills last month.

"Wholesale gas and electricity prices have been falling for months and we believe price cuts for both should have been passed on before the winter started."

But Mark Todd, director of website, criticised the delay on the price changes, as British Gas had announced its cut with immediate effect.

He also warned that "some [energy] companies may not cut prices at all".

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