New BG tariff cheaper than big six average

EDF Energy takes over as provider of the cheapest SVT offered by a big six firm following British Gas price hike

The new standard variable tariff to be offered by British Gas from September will still be cheaper than the average big six standard variable tariff (SVT), Ofgem data shows.

British Gas announced yesterday that it will increase its electricity price for SVT customers by 12.5 per cent, resulting in a 7.3 per cent cost increase for dual fuel customers.

The uptick will take the annual dual fuel bill for a British Gas SVT customer to £1,120, up from £1,044.

Data published this week by the energy regulator shows that while this £76 increase to customers’ annual bills will lose British Gas its position as the cheapest dual fuel SVT provider among the big six, its offer will remain less expensive than the big six SVT average. According to Ofgem’s monthly retail market indicators this average currently sits at £1,142 per annum.

Providing other supplier prices do not change before September, the cheapest big six SVT will now be offered by EDF Energy for £1,094 while the most expensive will remain Npower’s tariff which costs £1,187 per annum. The next most expensive will be offered by Scottish Power for £1,167, followed Eon’s tariff at £1,124, then the £1,120 cost of the new British Gas tariff.

The price increase at British Gas will also make its SVT more expensive than the average SVT offered by challenger suppliers. This currently sits at £1,046, though some independent suppliers charge significantly more – for example Cooperative Energy’s SVT costs £1,179.

The cheapest deal currently available from any energy supplier is £866 according to Ofgem, £254 cheaper than British Gas’s new SVT price.

British Gas’s decision to increase the price of its SVT met stiff criticism from consumer groups and politicians.

Shadow chancellor John McDonnell described it as “extortionate” while Gillian Guy, chief executive of Citizens Advice said the price rise “has been issued despite costs for energy firms dropping in recent months”.

She observed: “British Gas has in recent years been offering one of the less expensive standard variable tariffs from a larger firm, but today’s price rise will close this gap and hit long standing customers hardest.”

Guy added that it is “positive” that British Gas has elected to credit 200,000 of its SVT customers who receive the warm home discount with £76 to offset its price rise. But called for wider action to protect vulnerable and loyal customers from unfair energy prices.

“Capping energy bills for those eligible for the warm home discount would protect the poorest families and pensioners across the board – which is why Ofgem’s proposed safeguard tariff is the right approach,” she said.

“We want this to be matched by the introduction of yearly targets for suppliers to move their customers off the more expensive standard variable tariff – and a deadline after which anyone who hasn’t switched for 3 years would also have their bills capped.”

Iain Conn, chief executive of Centrica, the owner of British Gas, has opposed moves to introduce energy price caps. Instead, he suggests SVTs should be scrapped in order to bring an end to controversy about their impact on the energy market and customer engagement.