Scottish Power price cut
The price cut could save millions of households £32 a year Getty

Scottish Power has followed E.On and SSE by cutting its gas prices, with the company announcing a 5.4% reduction on 2 February. Millions of customers will see a cut in their bills, according to the energy provider, with them saving £32 (€42, $46) a year on average.

However, those with fixed-rate dual-fuel tariffs will not see their bills slashed, meaning little over half of Scottish Power's account holders will benefit from the cut. The company also announced the price cut will be active from 15 March.

Previously, SSE was criticised by personal finance experts for its 5.3% price cut, which would only be active from 29 March. Rival E.On also cut prices by 5.1% active from 1 February.

The big energy providers are finally reducing their gas prices after years of lobbying by competition watchdogs and politicians. Energy wholesale prices have fallen significantly and are at their lowest since 2010 but the companies waited years before making a move to lower their prices.

The high costs for households also fuelled mounting pressure on the industry sector. According to the Competition and Markets Authority (CMA), for low income families, 10% of total expenditures goes on energy bills.

The CMA also found consumers could save £160 a year on bills by switching providers but energy companies make it more complicated for customers to change firms, the watchdog has ruled. Meanwhile, energy costs for the suppliers hit their lowest point in five years at the end of 2015, according to market information provider ICIS.

The £32 cut introduced by Scottish Power accounts for 2.7% of the £1,200 average annual energy costs per household, according to findings by the CMA.

"A price war has broken out in the energy market, and we're finally seeing lower gas and electricity prices," analysts at price comparison website Moneysupermarket said. "That's great news for the millions of British households who have faced massive bills in recent years.

"But you'll only see big savings if you shop around and secure one of the new low-cost fixed-rate tariffs. If you're a typical energy user on your current supplier's standard tariff, you could be looking at savings of £300 a year if you switch. And that takes into account recent standard tariff price cuts."