The UK’s largest energy supplier will freeze direct debits for two million households on its standard variable tariffs (SVTs) over the winter to help them manage the largest energy price hike in years.
British Gas confirmed last week that it will raise the price of its default dual-fuel tariff in line with the adjusted price cap, to rise by 12% to £1,277 from 1 October. EDF, E.ON, OVO, Scottish Power and SSE have all announced similar hikes and other suppliers are expected to follow.
However, British Gas will delay increasing the direct debits of customers on its SVTs until February, to spare households a heavy financial blow just as energy usage rises and the government’s furlough schemed and Universal Credit top-ups end.
It will then distribute the higher costs across the warmer months when bills are usually lower.
The supplier said it wanted to give households “the option to create a bit of extra financial breathing space if they need it.”
“We understand that the price cap increase comes at a very expensive time of year for some of our customers. The furlough scheme which has helped millions of people is coming to an end, parents are getting children ready for a new school term, and Christmas is on the horizon,” British Gas.
The direct debit freeze is forecast to save British Gas customers an average of £50 over the winter. However, the support won’t help households that pay for their energy by cheque or pre-payment meters, which are often the most vulnerable. Pre-payment customers are facing an even steeper price hike, with the cap that limits their bills to rise by £153 to £1,309 per year.
British Gas has 1.2 million pre-payment customers and 1.3 million who pay for their energy with cheques. An additional 2 million customers have locked in their prices by signing up to a fixed-rate deal and won’t see their bills rise on 1 October.
Ofgem lifted the price cap to its highest level yet in response to surging wholesale gas and electricity prices, including the doubling of global gas prices over the last year.