British Gas is reducing household gas and electricity prices by an average of 3.2%, which is equivalent to £41 on average off the annual Dual Fuel bill*. An additional £12 rebate will be provided by the Government (£12 Government Electricity Rebate) in 2014 and 2015 to help lower the impacts of Government environmental and social policy costs on consumer energy bills. British Gas will pass this £12 rebate to electricity customers in autumn 2014 and autumn 2015. This brings the total annual saving for the average Dual Fuel customer to £53. 

This announcement follows the Government's proposed decision to make changes to the Energy Company Obligation and to introduce a rebate to customers to cover environmental and social policy costs. It also takes into account the agreement between the Government and electricity network companies to defer an element of electricity distribution costs in the period from April 2014 to March 2015. British Gas is passing on the benefit of all these changes to its customers in full.  

The price reduction took effect on 1st January 2014, and will apply to all customers, whether on variable or fixed tariffs. Chris Weston, the Managing Director of British Gas, said:

"British Gas is pleased to be cutting energy bills by an average of 3.2% from 1st January.  We’ve been able to do this because the Government has committed to making changes to the environmental and social obligations that are paid for through energy bills. These changes will now allow us to help more people at a lower cost.  

“British Gas strongly supports the aims of the Energy Company Obligation, which is transforming homes and communities across the UK, providing energy efficiency measures such as insulation, while keeping homes warm and cutting carbon emissions. While this price cut will be welcome news this winter, we will continue to do everything we can to help customers reduce their energy consumption and keep their energy bills as low as possible. British Gas has a lot of help to offer and I urge our customers to find out more at www.britishgas.co.uk or by calling us on 0800 048 0202."

Help available from British Gas includes:

  • Tariff Checker: If there is a British Gas tariff that can save our customers money, we will contact them to let them know.
  • Smart meters: We are upgrading all our customers’ meters to smart meters, helping them use less energy and ensuring accurate bills.

Today’s announcement means a part reversal of a price increase, of 9.2% in household energy prices (8.4% on gas and 10.4% on electricity), which was announced on 17th October 2013, and which took effect on 23rd November 2013. British Gas stated at the time that if the ECO programme was modified the benefits would be passed on to customers.

This price cut is based on the assumption that the Government’s proposed changes will be implemented in full and at the earliest opportunity. The changes also remove the possibility of there being any price increase attributable to these Government policies before summer 2015. 

* This comprises a price reduction of 3.2% on gas and 3.2% on electricity and means that the average annual Dual Fuel bill for British Gas customers, assuming seasonally normal temperatures, will fall by £41, from £1,282 to £1,241, based on Ofgem's new industry average annual consumption data, applicable from 1st January. Taking into account the Warm Home Discount rebate, the average bill will fall by a total of £53, to £1,229.

Data published by the Department of Energy and Climate Change has shown a sustained fall in consumption in recent years as a result of substantial energy efficiency programmes. As a result, Ofgem reduced its benchmark typical domestic consumption values for gas and electricity by 18% and 3% respectively in January 2014.