Delivering on our commitments to do more for our energy customers

Sarwjit Sambhi

By Sarwjit Sambhi
Chief Executive, Centrica Consumer

On 20 November 2017, we announced seven actions we said we would take to improve the UK energy market, by delivering more engagement, increased choice and better deals for our customers.

We said we would carry out these actions no later than 31 March 2018, the most important being the withdrawal of the Standard Variable Tariff (SVT) for new customers. So, here’s an update on our progress so far:

  • Action 1: We will unilaterally withdraw the Standard Variable Tariff (SVT) for new customers, aimed at increasing customer engagement: From 31 March 2018, British Gas’ SVT will be withdrawn for all new customers. We’ve long argued that energy contracts without an end date are one of the main problems with the market – you wouldn’t expect your car insurance policy to last forever. We firmly believe if everyone ended SVTs then the entire market would be even more competitive than it is today. They do not promote customer engagement and do not value loyalty.

  • Action 2. We will provide new offers to respond to customers’ changing needs: Since November we’ve introduced a host of new tariffs and offers:

    • Our new online-only tariffs, and bundled offers with our boiler maintenance and Hive connected homes products, have been very competitive and some of the cheapest of the large suppliers. Customers see the value in these deals and we plan to continue this momentum over the coming months. Keep a look out for new green and online-only tariffs coming soon.

    • We’ve also launched some exciting new Hive products and services.Our Hive Close to Home plan provides customers with all they need to set up their smart home, including our Hive View camera which gives customers peace of mind when they’re away from home.

    • Our Rewards programme has continued to attract thousands of customers; more than 800,000 to date. As a Rewards member, you get access to some great offers, such as free tickets to events at the O2.

  • Action 3. We will proactively offer customers a choice of fixed-term tariffs at the end of their contract. Customers will be offered at least two alternatives towards the end of their fixed-term contract, with more available on our website.

  • Action 4. We will introduce a new fixed-term default tariff: We recognise that sometimes our customers may not have enough time to make an informed choice. Our Temporary Tariff, a new 12-month fixed -term default tariff with no exit fees, will be available only if a customer doesn’t make an active choice at the end of their contract. Our Temporary Tariff will be £25 cheaper than the SVT.

  • Action 5. We will engage customers on legacy Standard Variable Tariffs and offer them better deals: As of now, we’re contacting all our customers who are currently on the SVT almost once a month, so they get more out of the relationship they have with British Gas. This includes presenting alternatives to our SVT. In 2017, when we contacted all 5 million customers on our SVT, over 500,000 switched to another tariff. We’re expecting an additional 1.3 million customers to choose another tariff by the end of 2018 and ultimately, we want everyone remaining on our SVT to do the same.

  • Action 6. We will introduce simple no-nonsense bills for all our customers. Customers tell us our bills are too complicated. The reason for this is regulation and the regulator (Ofgem) is looking to change this, but in the meantime we have taken a first step, from 28 March, to change the bill to add a simple summary of what your bill costs and any action you need to take.

  • Action 7. We will drive further improvements in customer service and in our own efficiency. We’ve been working hard to improve our customer service and customer complaints received are going down. They reduced by 39% in Q4 2017 and were down overall by 20% in 2017 compared to 2016. We’ve also committed to reducing our costs by £20 per customer by 2020.

We’ve put these commitments at the heart of our strategy to improve the UK energy market and satisfy the changing needs of our customers.

However, we know our actions alone won’t improve the market as much as is needed. To make the biggest difference we need the Government and the regulator, Ofgem, to act as well. That is why in November we also announced seven asks of Government and Ofgem which we will continue to push for.

We believe these solutions would be more enduring and sustainable than any temporary price cap. We’ve been clear that we believe price controls don’t work. The result is less choice for consumers and lower engagement. What’s important now is that we ensure the final form of the price cap does not reduce customer service, innovation or competition.