E.On is the first of the Big Six energy firms to give in to the pressure and lower gas prices, with the firm announcing a 5.1 percent reduction in pump prices.
Britain’s Big Six Energy Firms Start Cutting Gas Prices By 5.1%
The firm said that the new prices would be in effect starting February. The new prices translate to about $45 off the usual yearly gas prices and cuts down the yearly dual fuel expenses to $1,492, according to the firm.
There has been mounting pressure from regulators, politicians and activists for the energy firms to reduce the prices so consumers can enjoy the lower cost of gas.
According to market analysts, British Gas may also cut prices to avoid political battles over its massive accruing profits.
Historically low oil prices and increasing crude oil and gas supplies have helped to lower wholesale gas prices down to a six-year low.
Throughout the course of 2015, the price of wholesale gas declined by 34 per cent while the cost of power fell by 23 per cent in the UK alone.
In spite of the plunging crude oil prices, the Big Six energy supplier have not made any significant reduction in gas prices, only making single digit cuts in the early months of 2015.
For most of the suppliers, the standard variable tariff is still costlier than that of other suppliers who typically impose an annual fixed price tariff.
According to Ann Robinson, director of consumer policy at USwitch, suppliers should cut gas bills by about 10 per cent or around $169 on both electricity and gas to accurately reflect the decline in wholesale gas prices.
Dermot Nolan, CEO of regulator Ofgem, also said the vast majority of people should be enjoying lower electricity and gas prices.
The last time any of the big six suppliers reduced prices was in August when British Gas cut prices by just 5%.