April 27, 2007	Friday	Rabi-us-Sani 09, 1428

LONDON, April 26: British Gas, Britain's biggest domestic energy supplier, lowered its residential electricity and gas prices on Thursday in the latest salvo of a price war.

British Gas parent, utility Centrica, said the business was cutting electricity prices by 6 per cent and gas prices by 3 per cent. Coupled with cuts earlier this year this would reduce the average annual dual fuel bill by 207 pounds ($414.7), it said.

Rivals Npower, owned by Germany's RWE, Powergen, owned by E.ON and Scottish and Southern Energy (SSE) have also announced plans to cut their standard tariffs.

However, not all suppliers have cut prices.

“The predicted price war has yet to happen in full as EDF Energy and Scottish Power have still to cut their prices. We expect today's news to put pressure on these suppliers to act,” Karen Darby, founder of Website SimplySwitch.com said.

“Last week British Gas was criticised for its customer service record, so the energy company acted in the swiftest way it could -- by cutting prices,” Darby said.

UK energy regulator Ofgem said on Monday the average household could slash its annual energy bill by over 100 pounds by abandoning Scottish Power or EDF Energy, which have not reduced their standard charges.

Spain's Iberdrola completed a takeover of Scottish Power this week, creating Europe's third biggest utility.

“Our new chief executive, Jose Luis del Valle, has already started to review all parts of the business and customers can expect good news soon,” a Scottish Power spokesman said. EDF said its prices were continually under review.

SSE said it was still cheaper than British Gas, even after the latest reductions.

“The best benchmark is the dual-fuel standard quarterly, and we are cheaper than Centrica on average by 40 pounds across the country, even after their reduction today,” SSE Chief Executive Ian Marchant told Reuters. British Gas has around 10 million gas customers and almost 6 million electricity accounts.

INFLATION: The reduction in gas and electricity bills is likely to help moderate inflation over the next few months, economists say. High energy prices are the main reason why inflation has been so high over the last year, with consumer price growth spiking to a record high of 3.1 per cent in March, according to the Bank of England's Monetary Policy Committee..

Policymakers are counting on falling household energy bills to help bring inflation back to the central bank's 2.0 per cent target and reduce the need for further interest rate rises.

“This comes too soon to enter the CPI in April so should beef up the drag on the CPI from utilities from May onwards,” said Alan Clarke, an economist at BNP Paribas.

—Reuters