British Gas default tariffs to increase due to rising wholesale energy and policy costs.
Read the blog by Mark Hodges, Chief Executive, Centrica Consumer.
- The price of the British Gas Standard Variable Tariff (SVT) will increase on 29th May 2018 by £60 to £1161, an average 5.5% rise for a typical dual fuel customer.
- This increase is largely due to rising wholesale and policy costs. Similar pressures were cited by Ofgem when they increased the prepayment meter cap by just over £57 on 1st April.
- The price increase will impact 4.1 million SVT customers, with 3.7 million unaffected including those currently on fixed-term contracts, prepayment meters and vulnerable customers.
- The British Gas SVT default tariff was withdrawn for new customers on 31st March. All existing customers on this tariff are being contacted to encourage them to choose one of our fixed-term deals.
- British Gas has recently introduced a new default tariff. Customers who do not make an active choice when their existing fixed-term tariff ends will move onto a 12 month fixed-term default tariff, the Temporary Tariff, which will also increase by £60 to £1136 on 29th May.
- British Gas is continuing to launch a range of new competitive fixed-term offers for customers, offering value, convenience and choice.
The 5.5% increase, which applies to both electricity and gas, will mean a typical dual fuel domestic customer on the SVT will pay on average £60 a year more.
Wholesale gas and electricity costs and the costs of Government policies, including the smart meter roll-out and schemes to reduce carbon emissions, continue to rise. We continue to advocate that the funding of all Government policy costs should be paid for in a fairer way such as through general taxation.
In November 2017, as part of our 14 point plan to improve the market, Centrica announced it would end its Standard Variable Tariff (SVT) for new customers and offer a choice of fixed-term competitive tariffs to encourage customers to choose the best energy deal for them. We are delivering on this commitment.
We want to see all our customers actively choosing a fixed-term tariff and in 2017 we encouraged over half a million to move off our SVT. Over 2018, we expect a further 1.3 million customers to choose to switch to one of our fixed-term tariffs. We continue to sign up thousands of customers per week to British Gas Rewards, our programme to reward loyalty and improve engagement. Offers launched so far include free energy days, tickets for entertainment venues and free boiler services. We have nearly 900,000 members signed up to date.
As previously announced we are continuing to drive down our costs and are targeting to deliver additional cost efficiencies of £20 per dual fuel customer by 2020.
Mark Hodges, Chief Executive, Centrica Consumer said:
"We fully understand that any price increase adds extra pressure on customers' household bills. This increase we are announcing today is reflective of the costs we are seeing which are beyond our control. We are not raising prices for 3.7 million customers, including those already currently on fixed-term deals, on a prepayment meter or who are vulnerable.
We continue to work hard to reduce our own costs and keep our prices as low as possible. We have seen other suppliers raise prices and Ofgem increase the level of the prepayment tariff cap largely due to increasing wholesale energy and Government policy costs. Government policies, intended to transform the energy system, are important but they are putting pressure on customers' bills. We believe Government should level the playing field so the customers of all suppliers pay a fair share of energy policy costs We continue to encourage Government to consider moving these costs out of energy bills altogether and into general taxation..
We also continue to call on Ofgem to end the Standard Variable Tariff across the market which would encourage customers to proactively seek the best energy deal for them. We've taken action to end our own SVT for new customers. We have introduced a 12 month fixed-term default Temporary Tariff for customers who don't make a choice when their existing contract comes to an end. And we will continue to engage all our existing customers on our standard tariff at least six times a year to encourage them to switch to one of our new fixed-term deals."
Any customer concerned about their bill should contact us on 0800 048 0404 or visit www.britishgas.co.uk.