Centrica, the parent company of British Gas, has announced its second price increase of the year.
This increase will come into force from October 1st, affecting the 3.5 million British Gas customers on the company’s standard variable tariff (SVT increasing their annual bill by £44 to £1205 – a 3.8% increase. The 2.4 million British Gas customers on the company’s fixed rate tariffs are unaffected.
This comes less than half a year after the company raised their prices for customers on the SVT as well as those on temporary fixed tariffs back in April. The 5.5% price hike was at the time criticised by Claire Perry, the Energy Minister, who called the move an “unjustified price rise in its default tariff when customers are already paying more than they need to.”
Despite the double price rise this year, totalling almost 10% for customers on the SVT, the energy supplier claimed that its customers’ average annual bill was still lower than the average of its competitors. British Gas’s fellow members of the big six energy suppliers: ScottishPower, SSE, E.On, EDF and Npower, along with up and coming energy supplier, Bulb, have all put their prices up this year.
Even Ofgem, the energy regulator, has announced a £47 increase to its safeguard tariff, which is designed to protect 5 million vulnerable households from overpaying on their energy bills, taking it to £1,136 per year.
The chief of Centrica’s consumer division, Mark Hodges, released a statement ostensibly sympathising with customers, saying “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.”
Centrica says that since their April price increase, the wholesale costs of gas and electricity have increased by 21% and 18% respectively. The other energy suppliers and Ofgem likewise blamed the steep rise in the cost of wholesale energy for their price increases. However, Centrica claimed that they have been able to insulate customers from larger price increases in line with the rising wholesale cost because they buy stocks of energy in advance.
Mr Hodges also pointed out that British Gas was attempting to move customers away from the SVT onto more fixed rate deals. The company stopped offering the SVT to new customers in March of this year, and since the beginning of the year the company has reduced the number of customers it has on its SVT by 800,000 this year. The energy firm expects to add another half a million to that figure by the end of the year.
In the wake of Centrica’s announcement, consumer groups have been quick to criticise the move and urge customers to shop around for better deals.
Guy Anker, MoneySavingExpert.com’s deputy editor, called on customers angry with British Gas for the latest price increase “to turn that anger into action”. Alex Neill, of the consumer advice group Which? Said that customers “should take the power back into their own hands and radically change how much they pay, simply by choosing a better deal.”
Ms Neill also pointed out that customers had seen their bills increase by £104 on average over the last 6 months, whereas switching tariffs could save them up to £400 per year.