Britain’s leading household energy supplier British Gas announced on Thursday that it slashed the prices of its standard gas by an average 7 per cent, in a move that could result into price war in the sector.

The announced reduction in prices would save consumers more than 50 pounds per year.

Consumer groups had been criticizing British Gas for purchasing gas at cheap rates and selling it on expensive rates to pocket huge margins. Last year, wholesale prices of gas and electricity had fallen significantly.

British Gas expects to make £541 million this year as compared with £379 million in 2008 as suppliers have not been passing all the falls in wholesale prices to consumers.

British Gas parent company Centrica said its residential division was on track to see 43 per cent increase in profits this year, despite a drop of 7 per cent in energy consumption.

British Gas has enjoyed a drop of 25 per cent in wholesale costs but has slashed consumer bills by just 10 per cent.

A price war being pursued by the energy companies has of course cheered customers.

British Gas and E. ON have trimmed down their dual tariffs. As British Gas Unveiled Web Saver 4, pricing £993 per year on an average, E. ON released FixOnline 3, which costs £984 per year, cheaper by £10 than Web Saver 4. Under the E. ON tariff plan customers can fix their prices until 1 Dec. 2010. It may be noted here that earlier in 2009, British Gas slashed gas as well as electricity bills by 10 per cent after lifting them by 26 per cent in 2008.