Scottish gas slash prices by ten per cent

Published on Thursday 22 January 2009 08:28

Scotland's main gas provider today announced it is to cut the price of its standard tariff by ten per cent.

British Gas, known as Scottish Gas in Scotland, said the reduction would come into force on February 19 and would affect 75 per cent of its customers – or 7.5 million homes.

British Gas estimates the price cut will save customers 79 on the average household gas bill.

The firm said it had made the move after "unprecedented volatility" in the wholesale gas market.

British Gas raised its prices by 35 per cent last July meaning customers will still be paying more than they were before that increase.

A spokesman said the price of wholesale gas almost doubled last year and other costs, such as transportation, rose sharply.

"We did end up paying higher prices for this current winter," he said.

British Gas managing director, Phil Bentley, said the company understood energy prices were a "significant cost".

"We are committed to providing the best possible prices for customers," he said.

"This price cut will go some way to helping customers manage their budgets, and we will continue to do what we can, when we can."

He said the firm buys gas in advance, mitigating some of the sharp rises in wholesale costs. The recent dispute between Russia and Ukraine had caused just such a price spike, he added.

Other energy companies – many of whom raised prices significantly last year – have come under pressure to cut bills to reflect falling wholesale costs.

These have dropped in line with the cost of oil, which has retreated dramatically from its peak of 147 US dollars a barrel last year, to around 35 dollars as the global economic crisis deepened.

The UK's second biggest energy supplier, Scottish & Southern Energy, said in November it hoped to cut household energy bills early in the year.

British Gas also plans to introduce a prompt payment discount of up to 15 per year for customers on standard gas tariffs who pay quarterly from February 19.

The reductions will not apply to those customers on fixed tariffs. Households that pay by direct debit will see their bills reduced automatically.