Centrica cuts British household gas prices by 5 pct

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By Karolin Schaps

LONDON, Jan 19 (Reuters) - Britain's largest energy supplier British Gas, owned by utility Centrica (LSE: CNA.L - news) , will cut household gas prices by 5 percent from Feb. 27, becoming the second provider to pass on a fall in wholesale prices and put pressure on rivals to follow suit.

The cut announced on Monday will result in an average energy bill reduction of 37 pounds a year for British Gas customers, playing into the hands of Prime Minister David Cameron ahead of Britain's national election in May.

"It's welcome to see British Gas cutting prices. We'll continue to encourage energy firms to pass on falls in wholesale prices to customers," Cameron said in a post on social media network Twitter (Xetra: A1W6XZ - news) .

Wholesale crude and gas prices in Europe have taken a tumble in recent months on the back of a global supply glut, reducing some of the energy purchase costs utilities incur.

Finance minister George Osborne this month urged energy companies to pass on those savings to customers, saying that action could be taken if they failed to do so.

"We've been watching this (price fall) for many weeks and months and it really hasn't been driven by anything in the politics," British Gas Finance Director Michael Uzielli said on a conference call with reporters.

Rival provider E.ON announced a 3.5 percent cut to its gas tariffs last week and Centrica's news increases the pressure on rivals to reduce their prices.

The other major suppliers in Britain are EDF Energy , SSE (LSE: SSE.L - news) , ScottishPower and RWE (Xetra: 703712 - news) npower .

"It is likely that some or all of the remaining Big Six suppliers will look to offer some price cuts of their own," said Whitman Howard utilities analyst Angelos Anastasiou.

Centrica's price cut also marks a positive start to Iain Conn's new leadership of the utility after the former BP executive took the helm three weeks ago.

Like E.ON, British Gas did not reduce its electricity prices, arguing that wholesale costs had not come down as much as in the gas market.

Shares (Dusseldorf: DI6.DU - news) in Centrica were down 0.2 percent at 1127 GMT. (Additional reporting by William James; Editing by David Goodman)