Energy firm ScottishPower is reportedly planning to reduce prices by 3.3% after coming under fire for failing to pass on savings from the Government's green levy shake-up.
The move would reduce typical household gas and electricity dual fuel bills by around £40 to £1,235 for ScottishPower's 2.2 million customers on variable price tariffs.
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It is understood ScottishPower will also promise to pass on a further £12 rebate to all customers for the Warm Home Discount, which the Government has said will be funded through general taxation instead of through levies on energy bills.
But the tariff cut will only partly reverse increases of 8.5% and 9% for gas and electricity respectively that ScottishPower hit customers with a month ago.
Labour last week called on ScottishPower and rivals npower and SSE to immediately reduce prices for households after the Government last month slashed green levies.
Caroline Flint, the shadow energy secretary, said it was a "scandal" that three of the "big six" providers had still failed to pass on the savings a month after the green levy reductions.
British Gas has already reduced prices in response, announcing in early December that it would reduce bills by 3.2% on New Year's Day, scaling back hikes that saw prices go up by 10.4% for electricity and 8.4% for gas in November.
EDF and E.ON took the levy changes into account in the recent round of price rises, increasing tariffs on average by 3.9% and 3.7% respectively - far less than the increases announced by rivals.
SSE and npower are expected to follow ScottishPower by passing on levy savings.
They have already committed to cutting bills, but have yet to confirm how much or when the changes would take effect.
ScottishPower was not immediately available for comment.