British Gas raise prices 5.5% in 2018
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 themselves a better deal.
British Gas raise electricity prices from September 2017
British Gas have recently announced a price hike in their standard variable tariff by 12.5%, which as by no surprise, has angered their many loyal customers.
More than 3 million homes will be affected by this rise in electricity, only weeks after the government vowed to cap rising energy bills.
The rise of the tariff is at almost £100 extra added to your bill.
The supplier is also planning to scrap the discount for the combined gas and electric bill this year, which will now rise to £76, previously that was going to save the customer £15.
Iain Conn, Chief Executive of Centrica, the company that owns British Gas, has said “It is transmission and distribution of electricity to the home and government policy costs that are driving our price increase”.
£53 of the £98 has gone towards renewable obligation certificates
Centrica has also gone on to say that “The price rise reflects increasing delivery and environmental and social policy costs since 2014, and also the growing costs related to the UK smart meter rollout”.
So far, British Gas have installed 4 million smart meters in British households.The cost of installing a dual-fuel meter is £107 or £67 for one.
What they didn’t seem to let their customers know, was how much of the increase went towards renewable energy.
£53 of the £98 increase has gone towards renewable obligation certificates (ROCs).
These are certificates that every company purchases to meet their responsibilities for generating energy from renewable sources.
British Gas have said that they didn’t see an increase in their wholesale energy cost, they had actually seen their cost fall by £36, but other costs had risen £98 per customer.
In December 2016, British gas froze their prices until April 2017.
They then extended their freeze in February to August. Since then, the average price of a standard variable rate has fallen 15%. Their standard tariff is £286 more than the cheapest deal on the market.
Ofgem, the electricity and gas regulator has said in their latest supplier cost index, that providing dual fuel for energy suppliers has risen by 15%, not something British gas have mentioned in their reason to raise prices. Ofgem also estimate that the cost of getting the energy to your house is the most expensive part of your bill.
Moving gas and electricity around the country is known as transmission and the final part of the journey, actually getting it to your home, is called distribution.
The whole process equates to a quarter of your annual energy bill. Since 2014, transmission has become more expensive, while distribution has become cheaper. The difference between the two is £9 per customer bill.
The rise in price could see other rival suppliers start a new round of price changes this winter. There couldn't be a better time to switch provider and save some money before the more expensive months come back around.