British Gas and E.On have become the third and fourth suppliers to announce that they will be freezing prices on their standard tariffs for the duration of this Winter.
They follow Good Energy, who made the announcement in the latter stages of October, and SSE, who made theirs a month later. It is understood that prices will be frozen until April 2017, or the end of March at the earliest.
The decisions come after the Big Six came under increased pressure to reward loyal customers, many of whom find themselves on expensive standard tariffs after their fixed rate deals have expired.
It also comes after a report from the Sun newspaper suggested that the Big Six have been systematically underreporting their profits. According to the Sun’s report, which was based on their interpretation of data used by consulting firm PwC in a report for Energy UK, the Big Six have been making six times as much profit as they said they had. Spokespeople for the industry have disputed the Sun’s interpretation of the data.
Wholesale costs for energy have been increasing recently, to the extent that some small suppliers have had to push their prices up and one, GB Energy Supply, have been forced to close down entirely. However, many of the Big Six, as well as other smaller suppliers who had the capital and the foresight, bought up enough energy for the Winter earlier in the year when prices were lower. This has allowed them to be able to afford to maintain a price freeze.
The decision has been welcomed, but consumers are being warned not to celebrate too much – the freeze only applies to standard tariffs, which are almost always the most expensive plans available. Even with the freeze, most customers on standard tariffs would still be better off if they switched to a fixed rate deal, either with the same of a different supplier.
Gillian Guy, the head of Citizens Advice, explained: “Energy customers on the standard tariff are already paying a premium – their bills are as much as £380 more than for those on cheaper fixed deals.”
She added: “It’s also important that the government looks at a more permanent way to bring down costs for people on the standard tariff. One way to do this would be to automatically switch low-income customers who have been on the standard tariff for years to a cheaper deal.”
A huge portion of the UK’s households are still on standard or deemed tariffs at the moment, and pretty much every single one of these households could save hundreds if they switched. If you’re on a standard tariff, shop around and see how much you could save.