News
08 February 2007
British Gas launches social tariff to help 750,000 vulnerable customers
British Gas has today announced plans to reduce energy bills for its vulnerable customers. From 12 March 2007 it will introduce the UK’s largest social tariff on the energy market, aimed at cutting gas and electricity bills for up to 750,000 British Gas customers.
Combined with the general tariff reductions also announced by British Gas today, the new social tariff, called the Essentials tariff, means a vulnerable dual fuel customer on a prepayment meter will see a price cut of 24.6 per cent, this means they will be £285 better off compared with the existing tariff and a customer paying by cash or cheque will save £245 per annum1.
Essentials is British Gas’ response to calls to provide additional help to vulnerable customers, particularly those who use prepayment meters. The company believes these customers should be allowed to access lower prices such as direct debit tariffs irrespective of their method of payment. Direct debit is recognised as our cheapest standard rate for energy, but is not accessible to people who don’t have a bank account.
The tariff will be targeted at the company’s most vulnerable customers, including the 400,000 account holders that currently benefit from the British Gas Winter Rebate scheme2. Entitlement to a range of Government benefits such as Pension Credit, Disability Living Allowance or Child Tax Credit, will act as the qualifying criteria. British Gas will work with its charity partners to help identify the customers who should be offered Essentials and expects a significant proportion of its existing prepayment customers to qualify for the new lower rates.
British Gas Managing Director designate, Phil Bentley said: “We recognise the impact soaring wholesale energy prices have had on consumers, and we’re pleased to be the first supplier to have cut our prices for all our customers. Many of those who already struggle to balance the household bills have an added financial burden because they have not been able to access our cheapest standard energy tariffs - direct debit. Not having access to a bank account has proved an expensive barrier for many and I’m pleased that we are the first company to remove this obstacle on such a large scale.”
The move comes on top of the recent extension of British Gas’ Winter Rebate scheme, which saw the original 300,000 winter rebate payments extended by another 100,000 payments of up to £90 to help vulnerable customers with their energy bills through winter 2006/07.
William Gillis , Chief Executive, NEA said: “We have pressed the energy supply industry and the regulator to introduce social tariffs that actually represent the best deals available. NEA applauds British Gas for the introduction of a social tariff which will ensure that its low-income and vulnerable customers are guaranteed the best deal in terms of the prices they pay for gas and electricity from the company”.
Mike Lake, Director General of Help the Aged says: “Vulnerable older customers will welcome this significant initiative to reduce their energy bills. They have been subjected to punishing increases in the costs of living over the last 3 years, much higher than the headline rate of inflation, and well above rises in the basic state pension. British Gas’ new social tariff, coupled with its price reduction, will go some way to alleviate this burden.”
Ends
Contact: Alan McLaughlin on 07789 570598/ 01753 494105
Scottish Gas contact: Neil Cameron on 0131 344 6861
Notes to editors
1 Based on industry standard average annual gas consumption of 20,500 kWh and electricity consumption of 3,300 kWh on a single rate meter on prepayment and standard variable quarterly cash/cheque prices at 11 March 2007 compared to monthly direct debit prices at 12 March 2007. Figures are rounded and include VAT at 5%. Assumes all quarterly bills paid within 28 days of bill issue date. The Essentials tariff is only available to existing British Gas customers that meet the eligibility criteria or those that had signed up to join British Gas before 8 February Electricity price reductions averaged across all electricity regions - actual decrease will vary by region and meter type.
2 Excludes those already on direct debit rates.
3 Phil Bentley is currently Centrica Group Finance Director and assumes the roles of Managing Director, British Gas from March 2007.
Our standard tariffs are payment quarterly by cash or cheque, monthly direct debit and prepayment
British Gas will review its Essentials tariff model in March 2009. In the meantime it will be seeking agreement with other suppliers and stakeholders for industry-wide introduction of social tariffs to broadly common standards which would allow social tariff customers the same choice in the market as other customers.
DTI estimates produced for The Fuel Poverty Advisory Group (FPAG) state that for electricity, 20 per cent of prepayment meter households are fuel poor and this accounts for 25 per cent of all fuel poor households. The equivalent figures for gas in the same report state that 19 per cent of prepayment meter households are fuel poor and this accounts for 17per cent of all fuel poverty households.
British Gas – Fuel Poverty initiatives
2002 – British Gas launches ‘here to HELP’ - the largest supplier fuel poverty programme - which has helped over 580,000 homes to date.
2004 – British Gas launches a £10m trust fund, providing grants for customers who are unable to pay gas and electricity bills.
2005 – British Gas launches Winter rebate V1 paying up to 300,000 vulnerable customers up to £60 to help with winter bills.
2006 – Nov – energywatch welcomes news that British Gas will stop back charging prepayment debt
2006 – British Gas launches Winter rebate V2 paying up to 300,000 vulnerable customers up to £90. The final payment will be made at the end of April 2007.
2006 – Dec – British Gas extends Winter rebate V2 to include a further 100,000
2007 – British Gas launches Essentials – the UK’s largest social tariff
Eligibility Criteria for Essentials.
Disability living allowance
Pension Credit
Housing benefit
Attendance allowance
War disablement pension which includes either a mobility supplement or constant attendance allowance
Disablement pension which includes constant attendance allowance
Child tax credit where the relevant income is £14,600 or less
Working tax credit where the relevant income is £14,600 or less
Council tax benefit
Income Support
Income-based Job Seekers Allowance
