British Gas under fire from Ofgem after second price rise of the year
BRITISH Gas has reignited a war of words with the energy regulator by following Ofgem’s lead in hiking the price of gas and power due to soaring wholesale market prices.
The country’s biggest energy supplier said it will lift its average standard dual fuel tariff by £44 to £1,205 a year to sit just below the average rate offered across the Big Six energy suppliers.
British Gas boss Mark Hodges blamed the supplier’s second price hike in six months on the steady rise of wholesale energy market prices, which have marched up by 20pc since it raised prices in April.
“In response to rapidly rising wholesale energy costs, a number of supply companies have increased their SVT and it has also resulted in Ofgem announcing a second increase to the prepayment meter cap,” Mr Hodges said.
It is the first time British Gas has lifted tariff rates twice in six months since 2010, said Rik Smith, of comparison site Uswitch.
“British Gas’s standard tariff was already one of the most expensive tariffs on the market. There’s now a feeling that British Gas is hiding behind Ofgem’s prepayment price cap increase, to hike its own prices again,” he said.
By pinning the hike on the same reasons used by Ofgem only a day earlier to justify a hike to its regulated price cap the supplier has reignited a war of words with the regulator.
An Ofgem spokesman challenged the supplier to explain why it passed these costs through to customers and urged any British Gas customer who is unhappy with the hike to leave the supplier.
“The way we set this safeguard tariff is open and transparent,” the spokesman said.
“We encourage British Gas to be as transparent with its own customers in explaining why they have chosen to increase customer bills rather than absorbing any extra costs themselves. Those British Gas customers who are not satisfied should consider switching to a better deal to make savings of hundreds of pounds,” he added.
Mr Hodges said that British Gas has tried to shield customers from the full impact of the increase in the wholesale costs “until now”, by buying energy in advance.
British Gas is in a race to move as many customers as possible away from its standard variable tariff before the Government’s energy price cap descends across the market this winter.
It will extend from the 5m homes under the cap that use pre-pay meters or qualify as socially vulnerable, to another 11m homes on default deals.
In response British Gas has stopped marketing its standard tariff to new customers and expects to have only 3m customers on the default tariff by the end of the year, down from 4.3m at the start of 2018.