British Gas 3.2% price cut to take effect from New Year's Day

British Gas says its 1 January price reduction applies to all customers, whether on variable or fixed tariffs. Photograph: Rui Vieira/PA

Millions of hard-pressed households will enjoy some New Year's Day cheer in the form of a 3.2% reduction in their British Gas energy bill.

At the start of December, the company – which supplies nearly half of the country's homes – said it would reduce gas and electricity prices by an average of 3.2% with effect from Wednesday.

This is equivalent to £41 off an annual dual-fuel bill, with an extra £12 rebate for the government's warm home discount scheme, bringing the total annual saving to £53, said British Gas. The announcement came after the government confirmed a shakeup of green levies.

The cut in British Gas bills amounts to a part-reversal of a price rise that took effect on 23 November, which saw electricity prices go up by 10.4% and gas tariffs by 8.4%. The firm has about 12 million domestic customers.

Rival firm Scottish & Southern Energy (SSE) has said it would also cut its prices early in 2014. SSE indicated that it expected a typical dual-fuel bill for its customers to fall by about 4% before the end of March, the equivalent of about £50.

Npower also committed to a reduction in prices as a result of government changes to energy efficiency schemes, though a spokeswoman said it was not able yet to say how much that would be or when it would take effect.

The firm said it did not plan to increase energy prices before spring 2015 unless there were rises in wholesale energy costs or network charges.

British Gas said its 1 January price reduction applied to all customers, whether on variable or fixed tariffs, and meant the average annual dual-fuel bill would fall from £1,282 to £1,241.

It has also emerged that MPs are to question the bosses of the UK's energy network companies over the length of time it took to restore power to homes affected by storms over Christmas.

More than 150,000 homes were cut off after strong winds, torrential rain and flooding caused damage to power networks.

Many households were left without electricity for up to five days, and company bosses will have to explain to MPs why it took so long to restore power, the Daily Telegraph reported.

Tim Yeo, chairman of the Commons energy select committee, told the newspaper: "I'm very concerned about how long the network distribution companies took to restore power to thousands of customers. The committee will call them in when the House gets back."