Energy supplier British Gas has announced that it is going to increase prices for up to 3 and a half million customers by 3.8%.
The company’s Standard Variable Tariff (SVT), increased in price by 3.8%, which will lead to an average difference for customers of £44, taking the mean bill to £1,205 a year.
The new rate, described by critics as a “disgrace and a slap in the face for families”, will come into effect from the 1st October. British Gas has recently announced a profit of £430 million, despite rapidly shrinking customer numbers.
Parent company Centrica announced that the move was made in response to rises in wholesale energy prices. Centrica’s own statistics show that gas prices from source increased by 21% and electricity by 18%, hence the necessary rise – although supplies are bought in advance, negating market fluctuations somewhat. In a statement, Centrica’s chief executive for consumers, Mark Hodges, said: “We understand that any price increase adds extra pressure on customers’ household bills. However, this reflects the sharp rise in wholesale energy costs. In response to rapidly rising wholesale market costs, since April a number of other energy supply companies have increased their SVT prices and Ofgem have also announced a second increase to the prepayment meter cap.”
British Gas’ rival suppliers, E.On, SSE, Npower, EDF, ScottishPower, and Bulb, have all recently increased their prices – as has British Gas itself this April. Part of this is in response to Ofgem’s decision to raise its pre-payment meter cap in October. The 2.4 Million British Gas customers on fixed-price contracts will remain unaffected by the new rise.
The price rises have proven unpopular with customers – British Gas lost 1.4 million customer accounts in the first six month of 2018 alone, either to other major suppliers, or the new cadre of smaller energy firms that have appeared in recent years – there are now more than 70 energy suppliers operating in the UK.
The move has, as expected, attracted criticism from consumer awareness charities and campaign groups, who accuse the company of unfair price hikes compared to supply costs and other firms, and urge consumers to be more ruthless in changing or leaving firms. Guy Anker, deputy editor of MoneySavingExpert.com, said: “Millions will be rightly furious with British Gas when they hear of yet another price hike. But customers need to turn that anger into action.”
Alex Neill, managing director at consumer group Which?, focused on the overall change seen in the energy market in recent times, urging customers to change supplier to find a better tariff before the energy price cap comes into effect. Ms Neill said that consumers “should take the power back into their own hands and radically change how much they pay, simply by choosing a better deal. Before the energy price cap comes into effect later this year, customers still stuck on poor value standard tariffs should look to switch now as they could potentially save almost £400 a year.”