Minister hits out at energy bills hike for 4.1m
BRITISH Gas bosses were savaged by the Energy Minister last night over a £60 price rise that will hit 4.1 million households.
In an extraordinary intervention, Claire Perry told the company’s customers to switch providers.
It came after the energy giant – which trades as Scottish Gas north of the Border – announced a 5.5 per cent rise in the cost of gas and electricity, with other companies expected to follow suit.
Miss Perry said yesterday: ‘We are disappointed by British Gas’s announcement of an unjustified price rise in its default tariff when customers are already paying more than they need to.
‘This is why the Government is introducing a new price cap by this winter to guarantee that consumers are protected from poor-value tariffs and further bring down the £1.4billion a year consumers have been overpaying. Switching suppliers will always help consumers get the best deal.’
It comes as Money Mail today reveals the catalogue of dirty tricks being used by energy giants to make consumers accept smart meters.
British Gas, the country’s biggest energy supplier, said the increase in the standard variable tariff (SVT) was partly the result of a rise in the wholesale cost of energy.
But it also blamed government-imposed costs designed to encourage a switch to green energy through subsidies to wind farms, and support for the poor to install energy-saving measures in their homes.
The firm said the £11 billion cost of installtwo ing smart meters in all homes and businesses was also a factor.
The move by British Gas will increase the average annual household energy bill by £60 to £1,161 after the increase takes effect on May 29. Its customers will have the opportunity to switch away from the SVT to one of its cheaper deals before then. For example, it offers a one-year fixedrate deal, which includes boiler cover, at £1,055.
But consumer and price comparison experts said customers could save more than £350 a year by transferring to a cheaper rival.
Price comparison website uSwitch.com said it was possible to save up to £369 a year by moving to the small supplier Utility Point, which has a tariff charging £792.
uSwitch’s Claire Osborne said: ‘This rise is a bolt from the blue for the 4 million customers on British Gas’s standard variable tariff. Customers can send the clearest message that they won’t tolerate being taken for a ride by switching supplier.’
Martin Lewis, founder of MoneySavingExpert.com, said: ‘Ditch British Gas completely and savings of over £350 a year are possible.’
He said savvy consumers who shop around can protect themselves against price rises, but others, including the vulnerable, elderly and poor, often do not understand or are fearful about switching.
Mr Lewis said he expected the other ‘big six’ suppliers – SSE, Npower, EDF, Eon and Scottish Power – to put up prices: ‘I suspect we will see some of the others follow suit, not solely because of cost increases, but because in a PR sense, now British Gas will face the full first-mover flak, they can sneak in afterwards knowing it’ll be less of a hit.’
Citizens Advice spokesman Victoria MacGregor said: ‘There are serious question marks over whether these price rises are genuinely justified. Today’s price rise re-emphasises the need for the Government to act quickly and bring in its cap.’
Mark Hodges, chief executive for consumers at British Gas’s parent company, Centrica, said: ‘This increase is largely due to rising wholesale and policy costs which are beyond our control. The Government’s energy policies are important but they are also pushing up customers’ bills. We believe the Government should level the playing field so the customers of all suppliers pay a fair share of energy policy costs.’
British Gas profits last year rose by £19 million to £572 million, despite losing 750,000 customers. The energy giant said the increase was the result of efficiency savings.
‘Disappointed by the announcement’
The Mail has little time for the excuses made by British Gas as it yesterday announced a 5.5 per cent rise in combined gas and electricity bills.
Yes, part of the cost can be accounted for by ‘green’ levies which subsidise uneconomic solar and wind projects.
And yes, it is also true that wholesale prices have risen in recent months. But neither of those reasons justifies a hike which will cost four million hard-pressed customers an average of £60, from a company which raised electricity bills by an exorbitant 12.5 per cent last year.
Despite losing more than three quarters of a million customers in 2017, British Gas posted healthy profits of more than half a billion pounds.
As customers know to their cost, the Big Six energy firms are quick to respond when wholesale price rises, but deeply reluctant to act when they fall. Ministers were yesterday stressing you can change supplier, but if past experience is anything to go by, the remaining companies will follow British Gas’s lead in short order.
This paper believes firmly in the free market, but for years energy giants have fleeced their loyal customers. So while we have our reservations about the energy price cap, it is difficult in the face of such relentless profiteering to condemn it.