Centrica hikes tariffs for British Gas variable tariff customers again

Centrica was the source of more misery for British Gas customers not on a fixed tariff on Wednesday, confirming that its Standard Variable Tariff was to increase yet again due to what it described as rising wholesale costs.

The FTSE 100 energy retailer said the tariff, which was withdrawn for all new customers on 31 March after significant pressure from consumer advocacy groups, would increase for existing customers on 1 October by 3.8%.

That would take the average bill for a typical dual fuel customer to £1205, which Centrica said was “just below” the average of the standard variable tariffs for the Big Six energy suppliers, and represented an increase of £44.

Centrica said it was increasing our prices due to an approximately 20% rise in the costs of buying wholesale energy since April, as Ofgem cited when they announced an increase in the level of the prepayment meter cap on 7 August.

It said it would contact 3.5 million customers who would be affected, so they knew how their prices would change, and inform them of their alternative fixed-term offers.

A total of 2.4 million customers on fixed price products would be unaffected by the price increase.

Centrica claimed that until now, it had been able to shield customer bills from the full impact of the increase in wholesale costs as it had hedged its energy costs.

Since it withdrew its Standard Variable Tariff to all new customers in March, any customers who did not actively choose a new tariff upon expiry of their existing fixed-term contract would roll on to its new default 12-month fixed-term ‘Temporary Tariff’.

The company said the Temporary Tariff would be priced at £1180 for a typical dual fuel customer from 1 October, £25 less than its Standard Variable Tariff, and apparently “well below” the average of the larger suppliers.

Centrica did claim it “actively” wanted its customers to choose alternatives to the Standard Variable Tariff, claiming it provided “many opportunities” for them to consider its fixed-term deals.

It said it expected to have 3 million customers on the Standard Variable tariff by the end of the year, down from 4.3 million at the start of 2018.

It was not made clear why Centrica was still charging customers on its Standard Variable Tariff £25 more per year than customers who were on its replacement, the Temporary Tariff, however.

“We have today reluctantly announced plans for an increase in our Standard Variable Tariff,” said Centrica chief executive Mark Hodges.

“We understand that any price increase adds extra pressure on customers' household bills.

“However, this reflects the sharp rise in wholesale energy costs.”

Hodges said that, in response to rapidly rising wholesale market costs, since April a number of other energy supply companies had increased their standard variable tariff prices, and Ofgem had also announced a second increase to the prepayment meter cap.

“With more than 70 energy supply businesses now operating in the UK, the energy market is increasingly competitive and we are focused on offering all our customers attractive fixed and bundled deals.

“As well as providing more choice, we are striving to improve customer service levels, reducing our own costs and rewarding customers.”