Energy firm to cut gas prices 10 per cent after overcharging claims

EDF Energy said it was reducing gas prices by 10.2 per cent although electricity supply will remain the same.

The cuts will, according to EDF, lead to an annual saving of £63 a year for customers it supplies with both gas and electricity.

But an energy watchdog criticised EDF for not reducing its electricity charges and only doing the bare minimum to try to keep up with its cheaper rivals.

Today's price cut follows a report by industry regulator Ofgem which claimed EDF was charging £140 a year more than its rivals.

Ofgem urged customers to switch suppliers after the price gap opened up - caused by a first wave of cuts announced by British Gas in February.

Until today EDF, which supplies gas and electricity to 5.5 million customers in London, the South-East and the east of England, had failed to follow suit. Its new prices will not take effect until 15 June.

EDF's chief executive Vincent de Rivaz, announcing the new tariffs, said today: "Over recent years our customers have benefited from our careful management which has protected them from the highest prices. That's why we are pleased to make this new sensible move today."

It defended its decision not to lower electricity prices, because it claimed that last year its electricity rise was the smallest of any of its competitors.

EDF claims its customers will have saved £240 on gas and electricity bills since 2004 compared with British Gas customers. But Adam Scorer, Director of Campaigns for energywatch, the industry watchdog, said: "EDF Energy's price cut is just about the least it needed to do in response to moves from other suppliers. It will edge EDF Energy toward the better-value end of the pack.

"But it's a further sign that this is no price war for consumers, just a jockeying for position by companies looking to hang on to what they've got.

"But with no electricity price reduction and a long wait for the gas price cuts to kick in, it's up to EDF customers to decide if they are willing to wait or willing to voice their discontent by shopping around for a better deal."

In the first two months of this year 600,000 householders had switched power suppliers in the search for cheaper bills. The price cuts were prompted by a dramatic cut in wholesale prices. That was caused by a mild winter-which has seen demand drop across Europe while new gas pipelines have secured previously vulnerable supplies.

It was rumoured in February that one of the major suppliers had bulk-bought its energy at too-high a price and is now locked in. It had surprised experts that EDF had until now failed to match British Gas's price cuts.

EDF also announced today cheaper bills for its 60,000 customers deemed "most in need". The company said those customers will save £137 a year compared with customers on standard tariffs.

Karen Darby, head of SimplySwitch, which helps consumers change to cheaper suppliers, said: "EDF announces a cut during a heatwave and customers will not benefit till summer. It's cynical at best."

It has been reported that wholesale prices have fallen 50 per cent since last year.