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British Gas to cut gas prices by 5% British Gas criticised over 5% cut to gas bills
(35 minutes later)
British Gas says it will cut household gas prices by 5%, cutting annual energy bills by an average of £35. British Gas has been forced to defend itself, after announcing a 5% cut in gas bills, saving the average customer £35 a year.
It is the second gas price reduction in six months by the firm, which says the two price cuts together will lead to an average total saving of £72.It is the second gas price reduction in six months by the firm, which says the two price cuts together will lead to an average total saving of £72.
The latest price cut will take effect from 27 August. The cut will take effect from 27 August.
The news was criticised as "underwhelming" by the website MoneySuperMarket, which said the cut should be introduced immediately. Martin Lewis, the founder of MoneySavingExpert, called the cut "paltry" and "trivial".
The news was also criticised as "underwhelming" by the website MoneySuperMarket, which said the cut should be introduced immediately.
The price cut will affect 6.9 million energy customers either on standard or "fix and fall" tariffs.The price cut will affect 6.9 million energy customers either on standard or "fix and fall" tariffs.
It follows a similar cut of 5% that British Gas made in January, after moves by a number of the other "Big Six" energy suppliers.It follows a similar cut of 5% that British Gas made in January, after moves by a number of the other "Big Six" energy suppliers.
CostsCosts
The website MoneySuperMarket said the cut should be deeper, following a 25% fall in the wholesale cost of gas since December 2014.The website MoneySuperMarket said the cut should be deeper, following a 25% fall in the wholesale cost of gas since December 2014.
The price has fallen from 57.9p a therm last December, to 42.93p this week - following a drop in the price of oil. The price has fallen from 57.9p a therm last December, to 42.93p this week, according to the Natural Gas Price Index (NGPI) - following a drop in the price of oil.
Stephen Murray, energy expert at MoneySuperMarket, said the cut was "long overdue, and may seem underwhelming compared to how low wholesale prices are".Stephen Murray, energy expert at MoneySuperMarket, said the cut was "long overdue, and may seem underwhelming compared to how low wholesale prices are".
But energy firms say there are many other costs involved. But British Gas said the wholesale cost of gas made up only half the bill. It said other costs had risen.
"There are a range of costs that make up energy bills, some decreasing and others increasing," said Mark Hodges, the managing director of British Gas. "If you look at transmission costs - the cost of the pipes that move the gas around the country - actually those costs have been going up steadily for a number of years," said Mark Hodges, the managing director of British Gas.
They also buy gas contracts up to two years in advance, to guarantee sufficient supplies. Such costs have been going up "in the 10-15% range," he told the BBC.
Energy firms also buy gas contracts up to two years in advance, to guarantee sufficient supplies.
Will you see your gas bill go down? How do you feel about today's announcement? Please email haveyoursay@bbc.co.uk with your experiences.Will you see your gas bill go down? How do you feel about today's announcement? Please email haveyoursay@bbc.co.uk with your experiences.
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