Millions of consumers and businesses are set to receive price cuts of at least 10 per cent in their gas and electricity bills early in the new year, although some may have to wait longer. After a collapse in the wholesale price of gas and electricity in recent months, Britain’s Big Six energy suppliers – British Gas, E.ON, EDF Energy, ScottishPower, npower and Scottish & Southern Energy (SSE) – plan to cut customer bills next year in a move that will be welcomed by struggling households and the Government.

SSE, which has nine million customers, is widely expected to be the frontrunner, cutting prices next month. Ian Marchant, the chief executive, announced his intention to move as early as possible in October, partly to ease mounting political and regulatory pressure on the industry to provide relief for consumers who are struggling with the fallout from the worsening recession.

However, some of SSE’s rivals, such as British Gas, E.ON and npower, are expected to hold out until at least February or March. Energy companies buy gas and power using a variety of forward hedging contracts and there is always a delay before they pass on price cuts. Some companies may also have less advantageous hedging positions than rivals, which will influence their willingness to cut. The Big Six increased retail prices twice this year, but have not passed on any of the falls in wholesale energy costs that have occurred since the summer as gas and electricity prices tracked the collapse in the price of crude oil.

The forward price of gas for delivery in the winter of 2009 has almost halved from 109p per therm in July to about 63.6p per therm. The forward price of the same contract for power has dropped from £94.50 MWhour to £56.65 MWhour.

Harriet Harman, the Leader of the House of Commons, has warned the utility companies that the Government could force them to pass on falls in wholesale prices more swiftly. “The energy companies must pass on the price cuts to consumers – both businesses and families. They must also treat all consumers fairly,” she told MPs last week. “If they don’t … we will change the law to force them to do it.”

Expectations of the size of the potential price cuts vary widely. John Hall, an independent energy analyst, who advises many of Britain’s biggest companies, said that the wholesale price of gas and electricity represents about two thirds of the total cost of supply for the Big Six.

Mr Hall said this suggested that the companies could afford to make cuts of as much as 20 to 30 per cent by the spring “provided the wholesale price does not go back up again”.

Industry sources say that the companies are wary of slashing prices too far or too quickly because of their wish to protect profit margins and because of the risk that wholesale prices could go up again.

One source close to one of the Big Six said that the preferred option would be to make a “relatively small cut in the spring. This is not going to be a case of £250 off your bill”.

He said that 5 per cent to 10 per cent was a more likely figure, although much would depend on the competitive pressures if the first to move made bigger than expected cuts.

The source added that after SSE’s expected cut, the remaining suppliers would find themselves in a “staring contest”, trying to hold out for as long as possible before cutting bills. They will want to boost their earnings during the period of peak energy demand in January and February. The companies might also choose to announce price cuts several weeks before they are applied – in contrast to the price rises this year, which took effect immediately, or within days.

Andrew Horstead, energy analyst at Utilyx, the consultancy, forecast price cuts of 10 per cent to 20 per cent. “We have seen a sharp correction in wholesale gas and power prices since July’s record levels but the drop has been less severe than the dramatic U-turn in oil prices,” he said.

“But we are expecting wholesale prices to remain depressed into the new year, reflecting the deteriorating demand outlook, and we expect utilities to reflect this by passing on drops to end-users in early 2009, possibly in January, with tariffs potentially falling 10 to 20 per cent.”

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