SSE said it will lower standard gas tariffs by 5.3 per cent, saving customers on average £32 a year, although the move was dismissed as “trivial”.
SSE said the reduction will not take effect until 29 March.It follows just a week after rival E.ON announced it was lowering gas prices by 5.1 per cent from 1 February.
Energy minister Amber Rudd said the reduction was a “step in the right direction” and called on other providers to cut prices.
She said: “I’ve been pressing energy companies to put their customers first and pass on savings to them.
“SSE has taken a step in the right direction and I urge other suppliers to follow suit.”
Consumer groups said households were not seeing the full benefits of recent steep falls in wholesale energy prices. Martin Lewis, founder of MoneySavingExpert, said: “Again it’s just a trivial 5 per cent on gas only, not electricity, nothing close to the drop in wholesale prices. Energy firms must be whooping for joy that they can get away with such small cuts.”
Gillian Guy, chief executive of Citizens Advice, said: “Rival suppliers have no excuse for dragging their heels and urgently need to cut bills.”
SSE insisted wholesale energy prices make up an “ever smaller proportion” of bills.
It also said the price cut comes before its current price freeze ends. The group pledged in March 2014 to keep energy prices on hold until the end of June 2016.
Dermot Nolan, chief executive of energy watchdog Ofgem, said: “If the market is as competitive as suppliers claim, we would expect to see further price cuts. Ofgem referred the market to the Competition and Markets Authority (CMA) because we feel competition is not bearing down fast or hard enough on consumers’ bills.”
The CMA has been investigating the energy market since last summer. An early report in February found he large companies were overcharging loyal customers who did not switch suppliers by up to £234 a year. In a trading update, SSE revealed it lost 30,000 customers since last March, with electricity and gas accounts dropping to 8.28 million. It said customers used less electricity, down 3 per cent, while gas usage remained flat.
Alistair Phillips-Davies, chief executive of SSE, said market conditions had been “challenging”, due to a warm winter and floods caused by Storm Frank