British Gas has become the second leading energy supplier to freeze its standard prices this winter.
The company, the UK’s biggest energy firm, said the move would bring some peace of mind to more than 6 million customers. But consumer organisations said energy companies needed to do more than just freeze prices and warned that price rises of up to 10% were likely after the end of the winter.
Two weeks ago SSE, one of Britain’s “big six” energy suppliers, froze its standard tariffs, putting pressure on rivals to follow suit. Wholesale gas and electricity prices have risen sharply since June, prompting some smaller energy firms to raise their prices. Many bigger companies have already bought gas and electricity for delivery during the winter at lower prices.
In a Christmas message, British Gas said it was keeping the price of its standard variable energy tariff unchanged through this winter. A spokeswoman said prices had been frozen until at least the end of March. The company has also launched a deal that allows households to fix their energy prices for three winters, until March 2019.
Its standard variable energy tariff paid by direct debit is £1,044 – £40 more than its cheapest deal, a one-year fix at £1,004.
Consumer organisations gave a guarded response. Citizens Advice welcomed the winter price freezes from British Gas and SEE, and called on other big energy firms to follow suit.
Joe Malinowski, of TheEnergyShop.com, said: “That’s not a big deal, it’s only a few months. It’s a nice gesture but, call me cynical, the already expensive standard tariffs are going to stay expensive for this winter.”
Gillian Guy, the chief executive of Citizens Advice, agreed, saying: “Energy customers on the standard tariff are already paying a premium – their bills are as much as £380 more than for those on cheaper fixed deals.”
Martin Lewis, the founder of MoneySavingExpert.com, said the huge increase in wholesale prices and the weaker pound would soon enough affect household bills. “Come the end of winter, expect to see hikes of up to 10% by many of the big six companies,” he added.
Consumer organisations urged energy companies and the government to take further action. Guy said: “It’s also important that the government looks at a more permanent way to bring down costs for people on the standard tariff. One way to do this would be to automatically switch low-income customers who have been on the standard tariff for years to a cheaper deal.”
The chief executive of British Gas, Mark Hodges, sought to address concerns by making a “commitment that all British Gas customers will always get access to our best deals”. He promised an annual health check for customers on the standard rate to ensure they are on the right tariff.
There has been mounting criticism from politicians about the treatment of loyal customers by the large energy firms. When the business secretary, Greg Clark, met representatives from the industry earlier this month, he vowed to take action to ensure it treats customers properly.
A recent report commissioned by industry lobby group Energy UK showed it cost the big six energy companies £844 to provide dual fuel this year. But the average household bill was more than £1,000, according to campaign group BigDeal.com.
Theresa May used her Conservative party conference speech in October to criticise the high number of customers on standard contracts, saying: “It’s just not right that two-thirds of energy customers are stuck on the most expensive tariffs.”
Alex Neill, the managing director of home and legal services at consumer group Which?, said: “While it’s welcome that another big energy supplier is freezing its standard tariff prices, these are generally the most expensive deals on the market and customers should look to see if they can switch to a better deal.”
