NPOWER has become the last of Britain's "big six" energy firms to say it will reduce bills for domestic customers in response to Government policies.

The six, which had already announced above-inflation price rises, agreed in December to pass on savings from a Government plan to shift some environmental taxes away from energy bills in an effort to cut soaring costs.

Npower said dual-fuel customers who were faced with a price increase in December would typically see a £50 reduction in their annual energy bill, effective from February 28.

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Paul Massara, chief executive of RWE npower, said: "The natural next step would be to review all the impact of all policies that add to business and household energy bills."

It follows previous moves by SSE, Scottish Gas, E.ON , EDF and ScottishPower.