Newspaper article The Evening Standard (London, England)

Suppliers Square Up for Energy Price War

Newspaper article The Evening Standard (London, England)

Suppliers Square Up for Energy Price War

Article excerpt

Byline: ROBERT LEA

AN energy price war is set to come to the boil in the next few days with British Gas's big cuts in household bills, announced last week likely to be trumped by rival suppliers.

The Evening Standard has learned that Britain's five other big gas and electricity suppliers were shocked by the depth of British Gas's price cuts - which are set to come into effect next month - and are likely to react aggressively.

The move, a 17% fall in gas and an 11% slice off electricity - took British Gas from the country's most expensive utility supplier to its cheapest in one bold leap.

British Gas's price cuts were seen as a desperate bid to stem the haemorrhaging of customers that has seen the one-time-monopoly household gas supplier's consumer base dwindle to less than half the country's households.

It is believed that when British Gas parent Centrica reports full-year figures next week, the business will admit its household gas customer base will represent as little as 48% of the market against 70% at the start of the decade.

British Gas, which had already said it would cut prices in the spring, said last week that its tariffs will change from 12 March.

One executive at a rival supplier said: "The ballpark has changed.

We neither expected British Gas to cut so drastically nor so rapidly.

You can expect that other suppliers will cut, and that some of those cuts will take effect before 12 March to steal British Gas's thunder."

The most aggressive cutter is likely to be Scottish and Southern Energy, which has set out its stall to have the unique selling proposition of being the cheapest in the market, and as a result won hundreds of thousands of customers. It upped prices on 1 January, after rising costs in the summer hurt its bottom line, but has already committed to cutting soon.

The other four suppliers are also likely to cut, especially as on some tariffs they will now be over [pounds sterling]100 a year more expensive than British Gas. …

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