While half of the UK’s big six energy suppliers announce impending price hikes, British Gas has done the opposite, and will be keeping their prices frozen at least until August.
British Gas announcement comes just after Scottish Power became the third big six member to reveal that they will be raising their costs this Spring.
Scottish Power’s price hike will come into effect on 31st of March, and will see the cost of their electricity supply go up by an average of 10.8%, and their gas by 4.7%. This means that the average dual fuel bill will increase by 7.8%. Scottish Power has explained that around a third of their customers (1.1 million in total) will be affected, with bills remaining unchanged for customers on fixed price tariffs and for those with prepayment meters. Customers with prepayment meters have been advised that “they will see separate changes as the CMA price cap in implemented”.
They follow Npower, who announced last week that, from 16th March, they will be increasing prices for electricity by 15% and gas by 4.8%. EDF Energy will also be increasing their electricity costs in March, by 8.4%, but they cut prices for their gas supply by 5.2% in January.
Ofgem recently warned that any supplier intending to raise their prices would have to justify their decision independently, beyond citing rising wholesale costs, which most large suppliers protect themselves against using long-term hedging.
Ofgem’s warning seemed more prophetic than discouraging, and arguably few were completely surprised when Npower and Scottish Power subsequently announced their price hikes.
All three providers to have raised their prices have cited various increased running costs (beyond purely wholesale costs for the energy itself) as justification for their hikes, though often fairly vaguely.
Scottish Power’s UK retail director, Colin McNeill, said: “This price change follows months of cost increases that have already led to significant rises in fixed price products that now unfortunately have to be reflected in standard prices.”
British Gas, however, said that they would be keeping their prices where they are for the time being “despite increases in external costs”.
Their decision to freeze prices is one that, to some extent, puts paid to commonly held cynical view of the big six as working together cartel-like to shift prices in unison.
Fuelling what may, depending on how other suppliers act, turn into something of a price war, British Gas said: “our standard tariff continues to be cheaper than 95% of the market”.
All eyes will now be on SSE and Eon to see how they respond to this latest draft of announcements – whether they, like British Gas, put price rises on hold for a while to appease customers or whether they follow the example set by the rest and push their prices up in the Spring.
Whatever they decide to do, Ofgem’s advice is likely to remain unchanged. As usual, they have urged customers to shop around and compare tariffs as regularly as is feasible to make they that they are always on the right side of an often turbulent market.
“We would urge consumers to take advantage of the deals available from the many different suppliers and to shop around for a better deal if their supplier puts up their prices,” they said.
“This will put pressure on all suppliers to ensure they run their businesses efficiently to keep any impact on bills as low as possible.”