British Gas locks own customers out of best deals

By Victoria Bischoff

BRITISH GAS is refusing to give its cheapest energy deal to its own customers, Money Mail can reveal.

The company has launched a gas and electricity tariff of just £749 a year — but if you are already a customer, you are not allowed to sign up. The cheapest deal available to existing customers costs £1,019 — an extra £270 a year.

Money Mail has also found that EDF Energy briefly offered a deal that was available only to new customers in May.

Experts are warning households to expect a boom in this type of so-called exclusive deal. The result will be that people will have to switch energy provider at least once a year — if not more — to ensure they stay on the best deal.

Energy giants have been given the green light to betray loyal customers after regulators signalled that they would not punish firms using this marketing tactic to lure in new customers — even though it breaks the rules.

Four years ago, David Cameron promised during Prime Minister’s Questions that energy firms would be forced to offer existing customers their lowest prices.

The rules were then changed by the industry regulator Ofgem to enforce this pledge as part of a package of reforms in 2012 to make the energy market simpler and fairer for customers.

But two months ago, following an investigation into energy companies, the more powerful Competition and Markets Authority (CMA) indicated that it was preparing to scrap the rule in an effort to boost competition.

In its report, the consumer watchdog said: ‘We propose to modify the gas and electricity standard licence conditions to remove... the prohibition against tariffs exclusive to new/ existing customers.’

Some suppliers have started flouting the rules before they have officially changed — and Ofgem is turning a blind eye.

An industry insider told Money Mail that the rules are vague, so suppliers can get away with exploiting a loop-than-- hole over what deals existing customers must be told about.

Mark Todd, co-founder of price comparison website Energyhelpline, says: ‘This is the start of a worrying trend. This practice was banned in 2012 because it isn’t fair on customers — yet here we are again. Households will need to switch every year or even twice a year to get the best deal.’

The new British Gas tariff launched on May 27 is called HomeEnergy Exclusive June 2017.

An average household using 12,500 kilowatt (kWh) hours of gas and 3,100 kWh of electricity will pay £749 a year.

This makes it the cheapest tariff on offer from any major firm and just £14 more a year the best deal with a small supplier, GB Energy Supply. To get it you must sign up through comparison website uSwitch. Experts say this is how exclusive deals for new customers will typically be offered, because comparison websites have the power to negotiate special rates with big suppliers. They promise to advertise the firm’s deal and in return get a kickback every time someone signs up. To get the EDF deal, you had to be a new customer and sign up for it through the website Moneysupermarket. It was on offer for only two weeks, ending May 20. But at the time it was the cheapest one-year fix on the market costing an average £724 a year — £339 cheaper than the typical annual bill for a Big Six supplier.

Price comparison websites have been criticised for failing to show clearly all the deals on offer to customers — and instead pushing packages they get paid for promoting, regardless of whether or not they are the cheapest available.

Comparison sites argue that allowing suppliers to offer exclusive deals to new customers will help drive down prices for everyone.

Claire Osborne, energy expert at uSwitch, says: ‘Relaxing these restrictions will benefit customers by boosting choice, innovation and competition.’

But the downside is that unless you are always on the internet hunting for offers you could end up paying hundreds of pounds more than you need to for energy — while your provider saves its best prices to lure in new customers.

A spokesman for the CMA says: ‘We have a situation where millions of customers pay too much for their energy because they stay with their current provider and are stuck on the most expensive tariff.

‘Offers for new customers are one way — as seen in other markets — that you can encourage people to switch.

‘Limiting the ability for suppliers to win customers from other suppliers restricts competition when we need more of it.

‘We haven’t finished our investigation yet so this is still just a proposal.’

A British Gas spokesman says: ‘As this tariff is being offered by uSwitch, it is available only to new customers. However, British Gas typically launches new, competitive tariffs every four to six weeks, which are available to existing and new customers.’

An EDF Energy spokeswoman says: ‘The CMA remedies are aimed at increasing competition between energy suppliers and also between price comparison websites to attract customers who have not made active choices in the past.

‘We are responding by starting to test the effectiveness of different ways of reaching new customers.’