Centrica's British Gas to cut electricity prices

Centrica has announced its wholly owned subsidiary, British Gas, is to reduce its standard domestic electricity rate by 5%.

The change comes into effect immediately and will, claims the firm, make it "the cheapest major standard electricity supplier, on average, in Britain."

The price change affects 5.3m British Gas (and Scottish Gas) customers who are on a single rate, variable tariff . On average they will save £24 each per year.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

British Gas's Managing Director of Energy, Ian peters said of the decision: "We want to keep prices as low as possible for our customers. Household budgets are stretched, and we are doing everything we can to help our customers keep their bills down."

Centrica added that is was unable to reduce gas prices at the same time as the electricity rate cut because: "We have to buy energy in advance to protect our customers against any sharp spikes in prices ... While there have been some short-term falls in the cost of gas, the longer term trend continues to be upward."

The company also failed to offer a guarantee that there would not be price rises at the end of 2012, blaming uncertainty in the gas futures market.

Centrica shares had fallen by 1% by 1:41pm.

BS