Gas flameBritish Gas has cut bills for more than five million customers by announcing an average 5% drop in its standard electricity tariff.

The price cut will take effect immediately and will knock £24 from the average bill - six months after the Centrica-owned company increased gas bills by 18% and electricity by 16% in August.

While British Gas said there was no reduction in its gas price, Southern Electric and Swalec owner SSE said later that it would cut the price of household gas by 4.5% from March 26.

The moves follow an announcement on Wednesday by French-owned rival EDF to cut gas prices by 5%. Other operators are expected to follow suit.

British Gas claimed the price reduction meant it now offered the cheapest standard electricity, on average, of any major supplier. It added that its move, which follows a pledge by the energy giant not to raise prices throughout the winter, will save customers more than £100 million in reduced bills.

Ian Peters, managing director of energy at British Gas, said: "Household budgets are stretched and we are doing everything we can to help our customers keep their bills down."

All the big six major suppliers increased prices over the summer following hikes last winter, tightening the squeeze on cash-strapped households. But recent reductions in wholesale energy prices have led to calls for suppliers to reverse hikes.

SSE said around 3.5 million households in Britain will benefit from its reduction, which will cut typical gas bills by around £28 a year. It has also extended its commitment to cap household electricity and gas prices by two months to October, although it said it will look to implement more price reductions if it can.

Customers of M&S Energy, which is supplied by SSE, will also benefit from the gas price reduction and the extended gas and electricity price cap. SSE increased household gas prices by 18% and electricity by 11% in September.

Alistair Phillips-Davies, its generation and supply director, said: "I hope that this package of measures will give our customers some respite from the seemingly endless rises in household costs that we have seen in recent times."
© 2012 Press Association