The Energy Challenge

Energy & Consumer Bills

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The UK is committed to targets of reducing carbon emissions by 34% from 1990 levels by 2020 and 80% by 2050, and at the same time we need to ensure that energy remains affordable.

Centrica is deeply conscious of the cost-of-living challenge facing many customers, and of the responsibility we have to keep millions of Britain’s homes and businesses warm and well lit. 

British Gas constantly reviews its pricing and margins and has cut prices twice in the last six months, taking £72 off the average annual bill. The energy market is highly competitive and suppliers need to offer competitive prices to retain and win customers.

According to a YouGov survey in October 2014, 30% of consumer wrongly believe supplier profits are the biggest part of their energy bill. In fact British Gas' operating costs and profit contribute very little to rising consumer bills, and have fallen over the last 5 years. In 2014, profit margins (after tax) were around 4%.

What are the costs that make up an energy bill?

  • The cost of buying energy in the global market. Britain increasingly has to import more gas from overseas and pay international prices, and old power stations require replacement with lower carbon, but higher cost, generation.
  • The costs for using the networks that transport gas and electricity to homes; set by the regulator, these are going up as the grid is updated to hook up new generation such as wind farms.
  • The cost of Government social and environmental programmes. In other words, the funding British Gas puts into alleviating energy poverty and supporting the national commitment to low carbon. The UK needs £100 billion of investment in low carbon generation capacity and grid upgrades to reduce energy use and tackle climate change, and some of this is funded through consumer bills.

What makes up your energy bill

* Based on actual 2015 results, this is an average of all payment types/tariffs/regions and is based on consumption levels of 427 therms for gas and 3496 KwH for electricity. 

 

How does the wholesale energy market relate to household bills?

  • Wholesale costs make up just under half of the average bill.
  • Whilst we have seen falls in wholesale prices, to protect customers from volatile price movements, British Gas buys the bulk of its gas in the forward market, often up to two or even three years in advance, where the decline in price has been much smaller.
  • Most of the gas being used in customers’ homes today was bought at higher 2013/14 prices, but as soon as wholesale costs for 2015 reduced to a level where it was possible to pass the reduction onto customers in January, British Gas announced a 5% reduction to household gas prices.

More about the global energy market.

What we are doing to help

Making sure that customers are always on the best deal

'Tariff Check' is a free personalised half-yearly review for each British Gas customer based on their actual energy consumption. Customers will be told if they could save money by moving to a different British Gas deal.

Making energy bills simpler, clearer and fairer

To simplify tariffs, British Gas has:

  • Introduced a single unit rate for consumption alongside a fixed standing charge, reducing the number of tariffs
  • Removed cancellation fees for customers who want to move to a different British Gas deal because their needs have changed;
  • Streamlined our standing charges to make it easier for customers to compare tariffs

British Gas has introduced its simplest ever bill:

British Gas Old Bill vs New Bill
Putting customers in control of their energy use

British Gas is also focusing on delivering energy efficiency and technology measures which are key to bringing down bills.

  • By the end of 2014 British Gas had installed around 1.3 million residential smart meters in UK homes, and has now sold over 170,000 smart thermostats, with sales of Hive Active Heating™ running at around 3,000 a week
  • Smart technology will also allow the development of new tariffs so that consumers can pay for their energy according to time of use.

Read about the benefits of smart metering technology

In 2014 British Gas helped nearly 1.8 million households

British Gas spends more than any other supplier to support vulnerable customers:

  • In 2014 nearly 1.8 million customers in need were helped with support totalling over £400 million in the UK
  • Last year over 500,000 customers received £140 off their British Gas bills through the Warm Home Discount
  • British Gas has the broadest customer eligibility in the industry, with no cap on the number of applicants – and are the only one of the major energy suppliers not to impose a cap
  • British Gas has also given over £75 million to its independent Energy Trust since 2004, helping thousands of people struggling with debt, regardless of whether they are British Gas customers
British Gas has spent over £880 million on improving 350,000 homes
  • British Gas estimates that on average, £1 in every £4 spent on heating bills in the UK is wasted due to poor insulation.
  • Over the past six years, British Gas has insulated more than three million customer homes. However, despite this around 12 million homes are still without adequate loft or cavity wall insulation.
  • So far British Gas has spent over £880 million on improving 350,000 homes through the ECO scheme, installing more than 410,000 energy efficiency measures
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