Co-operative Energy will cut power and gas prices by three per cent on average from next February, the energy supplier has said.
Co-operative Energy is the first energy supplier to announce energy rates cuts this winter, explaining that mild autumn weather had reduced underlying wholesale energy prices.
The announcement has come four months after Britain's six largest providers - EDF Energy, E.ON, RWE npower, Centrica, SSE and Scottish Power - passed on steep increases, angering already cash-strapped Britons.
High energy bills drove UK inflation rates to a three-year high in September, with consumer prices rising 5.2 per cent year-on-year, the second-highest gain in the European Union.
"This autumn's exceptionally mild weather has led to a drop in wholesale prices, so we're passing on those savings as soon as we possibly can," said Nigel Mason, Co-operative Energy's business development manager.
The small supplier, which entered the market in May this year, announced a price increase in late September of 18 per cent for gas and 11 per cent for electricity, but is the first UK provider to slash bills on the back of recent wholesale price drops.
British gas for delivery in summer 2012, a current benchmark contract, has fallen 15 per cent since early August, around the time when the first winter price rises were announced.
EDF Energy said it was constantly reviewing its prices and that current tariffs were locked in until spring 2012.
This means its customers cannot benefit from price cuts until then.
Britain's large energy suppliers, who control 99 per cent of the market, have come under fire from politicians and consumer lobby groups, who claim the companies increase bills more quickly than they pass on savings.
Consumer watchdog Consumer Focus has repeatedly urged energy users to switch supplier to ensure they receive the cheapest tariffs.