British Gas Raises Prices
British Gas raised its prices by an average of 5.5% on the 29th May 2018. 4.1 million British Gas and Sainsbury’s Energy customers, which is a British Gas white label provider, have been hit by the price increases. The average bill has increased by £60 - a £30 increase for gas and £30 for electricity.
British Gas blames the price increase on higher wholesale prices, the cost of installing smart meters and green energy subsidies. However, the price hikes were immediately criticised by regulatory bodies, consumer protection groups and MPs across the political spectrum. The Government said it was “disappointed” with the “unjustified” decision.
Claire Perry, Minister for energy and clean growth tried to reassure consumers about the actions that the government is taking to try to control energy companies out of control price increases.
Who will be affected?
The customers who are affected by the price rises are those who are on a standard variable tariff (SVT). Customers who are on a Temporary Tariff will also be affected. You can find out if you are on one of these tariffs by looking at your bill or contacting your supplier directly.
Standard Variable tariffs track the price of energy on the wholesale market, and so your bill changes every month. Customers are usually on these standard variable tariffs because they have never switched supplier. Also, many customers end up on these tariffs by default when their fixed tariff contract ends. Customers should be very wary of ending up on these contracts as they are terrible value for money.
Unfortunately, the customers who are most at risk are vulnerable and elderly who are on contracts with one of the big six suppliers. Over a quarter of over 65’s are on a standard variable tariff which is the most expensive on the market. Just 14% claim that they feel informed about the tariff they are on and how they can pay. This means that many customers are under-informed and afraid that switching might be difficult or cause them to lose electricity supply. There is a lot of help and advice for the elderly or vulnerable including help with switching to cheaper tariffs, sending meter readings and bills. Customers just need to know how to access it. We would advise customers in this situation to get help their relatives or call a reputable energy advice service, such as Selectra, to help with the process.
What can customers do to avoid the price hikes and save money?
Unfortunately, while the government caps will help protect consumers from very poor value tariffs, the truth is that the majority of customers will still be on very expensive tariffs if they stick with the big six. Simply changing your tariff from a standard variable tariff to a fixed contract can save you some money but the only way for customers to send a clear message to energy suppliers is by voting with their feet.
“This is why the government is introducing a new price cap by this winter to guarantee that consumers are protected from poor value tariffs and further bring down the £1.4bn a year consumers have been overpaying the Big Six. Switching suppliers will always help consumers get the best deal, saving £308 by switching from a default tariff offered by the big six.”
Customers can save hundreds of pounds by switching to some of the new independent suppliers, who not only have prices hundreds of pounds lower than the big six but generally have highly rated customer service. Customers who are on one of the variable tariffs that are affected won’t have exit fees so they will be free to leave whenever they want without paying any penalties.
It only takes a few minutes to do a price comparison of the whole market and find yourself a better deal!