The move - which will be implemented immediately - will see electricity prices cut by around five per cent for 5.3 billion British Gas customers.
Despite the cut to electricity prices, the energy supplier has revealed that they have no plans to make any similar cuts to its gas prices.
British Gas previously increased the price of gas bills by 18 per cent and electricity by 16 per cent; these latest electricity price cuts will see a the average bill reduced by Â£24 - compared to the average of Â£190 added to dual fuel customers' bills when the prices were increased.
Managing director at British Gas, Ian Peters, commented on the cuts.
He said: "We want to keep prices as low as possible for our customers.
"Household budgets are stretched and we are doing everything we can to help our customers keep their bills down," Mr Peters added.
Supporter of the upcoming Big Energy Week, Consumer Focus, has welcomed the reductions.
Director of policy and external affairs, Adam Scorer, said: "The widening gap between wholesale and retail prices has become the fault line for consumer confidence. Companies want to regain the trust of their customers. Narrowing the gap is a necessary part of achieving this.
"The other four major suppliers should act now if they want to be seen as committed to an effective competitive market," he added.
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