Powergen, the UK division of French utility giant E.ON, has launched three new products that it claims guarantee to beat British Gas' standard prices, further intensifying the continuous energy price war in the UK.

The energy provider has guaranteed to keep its prices below British Gas’ standard prices for at least the next 18 months, until September 2008. In addition, the utility company has increased its online discounts by 4.2%. Its Powergen EnergyOnline Extra Saver is now priced at GBP54, or 6.2% cheaper than British Gas’ standard dual fuel price, which makes it the cheapest deal in eight energy regions out of 144.

Furthermore, Powergen has allegedly told uSwitch.com that further reductions are to be expected in the near future.

Geoff Slaughter, product manager at uSwitch.com, commented: Powergen is hitting straight back at British Gas with this guarantee and setting a challenge to all the other providers who have yet to make a move. With British Gas’ market share falling to 48%, Powergen has spotted a chink in British Gas’ armor and is attempting to thrust home its advantage.