British Gas hits back with ‘tit for tat’ price cuts

British Gas, which yesterday looked like being the first casualty of the energy price war, has hit back at rivals Powergen with ‘tit for tat’ price cuts. The energy giant’s new move – its second price cut announcement in just over a week – shows how much heat suppliers are beginning to feel as the energy war ignites, says uSwitch.com, and also points to British Gas’ determination to retain its cheapest supplier crown.

Geoff Slaughter, energy product manager at uSwitch.com, says: “This is not a simple, straightforward price war. This cynical new move by British Gas is more to do with preserving its multi-million advertising spend - where it is claiming to be the ‘cheapest major gas supplier’ - than giving consumers a good deal. It begs the question how much fat British Gas has left to cut and why they are making these cuts piecemeal. Is this going to be death by a thousand cuts?

“British Gas is also highlighting the fundamental flaw in rival Powergen’s guarantee of being cheaper than British Gas for 18 months. The guarantee only applies to British Gas’ standard tariff, but this cut is on their online tariff, which Powergen is not tracking. Today’s manoeuvre renders their guarantee as worthless – something I’m sure British Gas has considered.

“But ultimately, regardless of the motives, if the suppliers keep engaging in ‘tit for tat’ price spats then the biggest winners in the energy price war will be the 10 million British consumers who have never switched before. They could be on track to save £2.02 billion in 2007.”