British Gas responded to demands for tariff cuts today by saying it would reduce gas prices for 7.5 million customers by 10 per cent.
The utility, owned by Britain's Centrica, said in a statement that the cut in its standard rate from February 19th would reduce average annual household gas bills by 84 pounds ($117).
Prime Minister Gordon Brown and industry regulator Ofgem have urged utilities to help hard-pressed consumers by passing on falls in wholesale energy prices against a background of global economic turmoil and falling UK inflation.
The reduction, however, fell short of the 35 per cent rise in gas prices that British Gas introduced in July last year. It was also outstripped by the 38 per cent decline in UK wholesale prices since then, an analyst said.
One City analyst said Centrica could have done more and may be waiting for rivals to react.
"In reality, we believe British Gas has left a lot of its powder dry and we would expect further cuts in its gas and electricity prices in response to the moves of its competitors," Angelos Anastasiou at Pali International said in a note.
The Department for Energy & Climate Change (DECC) declined to say whether the government believed the move by British Gas was adequate, but said it expected companies to do as much as possible.
"It is welcome that reductions in wholesale energy prices are starting to be passed on to consumers," DECC said in a statement.
"We look to all energy companies to reduce prices as far and as fast as they can." At 11.17am, shares in Centrica were down 2 per cent at 260 pence.
PA