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SEE's price freeze is good news for consumers, says Energy Secretary Ed Davey
Energy supplier SSE says it will freeze domestic gas and electricity prices at their current levels until 2016.
The move comes after many of the "big six" UK energy firms raised their tariffs at the end of last year.
SSE, whose companies include Swalec, said the freeze would lower profits, but it would "streamline" its business to cover the shortfall.
The company announced it would cut 500 jobs and shelve three planned offshore wind farm developments.
As a result, SSE hopes to make annual operational cost savings of £100m.
The BBC's industry correspondent, John Moylan, says the freeze has echoes of Labour's flagship energy policy, which promises to keep prices at the same level for 20 months after the next election if Labour are elected.
End QuoteClearly, it [SSE] is responding to public, regulatory and political pressure to bear down on prices"
The proposal has been heavily criticised by many in the industry.
But SSE chief executive Alistair Phillips-Davies said "delivering the lowest possible energy prices" to customers was "central to everything we do".
"One of biggest concerns they [customers] have is that energy prices may well be going up again," Mr Phillips-Davies told the BBC. "The most important thing for our customers over the next couple of years is freezing prices."
Green taxesThe boss of the UK's second biggest supplier also called on the government to take energy taxes out of bills and retrieve them through general taxation instead.
The move would make sure tax "is paid for fairly in a way that is proportionate to people's income and protects the vulnerable", he added.
The company has written to the leaders of UK political parties on the subject of green levies, he said.
"We're looking to do whatever we can to bring down prices for consumers," Mr Phillips-Davies said.
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SSE, which is based in Perth, said it would legally separate its retail and wholesale businesses by March 2015, in order to "improve transparency".
"I hope that people will start to recognise SSE is not part of the problem but part of the solution," Mr Phillips-Davies said.
Energy Secretary Ed Davey said: "This shows that the big six are starting to realise they need to take big action if they want to keep their customers, who have been switching suppliers in record numbers.
"SSE have shown today that the big energy firms are able to cut their costs and profits, and be confident about their ability to weather potential uncertainty in the wholesale markets, to give bill payers long-term price security.
"Customers of the others will be asking whether their suppliers will do the same."
Regulators are this week expected to give their verdict on whether there should be a full investigation into the competitive practices of energy companies.
Mr Phillips-Davies said that SSE had been working on the price freeze for some time, and that changes to its business were not linked to the upcoming verdict.
Clare Francis, editor-in-chief at Moneysupermarket, said that other energy suppliers have price-freeze tariffs that could help consumers save money.
"The political spotlight is on the energy industry at the moment and it would not surprise me if we see other firms act to try and quash feelings that this is a market that is broken and not working in the customers' interests," she said.
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