Business

Npower to cut gas prices by 5%

Gas hob
Image caption A number of suppliers have announced changes to prices this week

Energy company Npower has announced that it will cut gas prices by 5% from 1 February.

The move comes in the same week that three other major suppliers have announced price cuts, as wholesale prices dip during a mild winter.

British Gas has cut its electricity prices by 5% with immediate effect and SSE will reduce gas tariffs by 4.5% on 26 March.

EDF Energy will cut its gas tariff by 5% on 7 February.

Small provider First Utility has also launched a new fixed-price energy tariff.

Falling costs

The mild winter has led to lower demand for energy, with wholesale prices having fallen recently.

"It is obviously no coincidence that several energy companies have announced price reductions this week and we do not apologise for joining them," said Paul Massara, chief commercial officer of Npower.

"We are now at a point where costs, at least in the short term, can justify a price cut."

The price cut will reduce the average annual domestic bill by about £39. The company is also waiving cancellation fees, for two months, for any customer on a fixed-price deal and who wants to move to a cheaper tariff.

Npower raised its gas prices by 15.7% and its electricity prices by 7.2% in October. This time, its electricity price is unchanged.

Adam Scorer at Consumer Focus, said price cuts by four firms in three days was good news.

"We hope this rapid succession of announcements means that they understand that consumers expect them to respond quickly when wholesale costs are down for a significant period of time," he said.

"Scottish Power and E.On customers will expect to see their suppliers rapidly follow suit given the speed from other suppliers.

"These cuts will not compensate for the big rises in 2011, they will not transform the energy market or significantly lessen the burden on hard pressed consumers."

On Monday, Citizens' Advice begins an Energy Week aiming to help people save money on their fuel bills, with advisers across the country handing out tips on how to spend less on heating and powering the home.

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