British Gas 'to cut prices'

Energy giant British Gas is to announce a cut in its prices, sources said.

An announcement of a 7% cut could be made as early as Thursday.

An official of the GMB union, which represents British Gas workers, welcomed the move.

"British Gas has been buying gas cheap and selling it dear," he said. "Prices should have been cut before the winter.

"The very least the company should do is offer a rebate."

The claims came after the energy watchdog said electricity and gas may become unaffordable for an increasing number of households unless drastic action is taken to secure power supplies.

Ofgem said failure to reform the energy system could mean power shortages after 2015, while inaction will lead to a "degree of crisis" in three or four years.

It has predicted average household bills could jump as much as 25% - to nearly £2,000 - without radical moves.

But the Government said it would be able to meet power needs in the years ahead, despite the watchdog's warnings of "reasonable doubt" over the security and sustainability of Britain's energy.

Ofgem chief executive Alistair Buchanan said a failure to act would risk shortages after 2015 and mean customers would end up footing the bill for costly short-term solutions.