Centrica to axe costly standard fuel tariffs

Energy: Customersonbasicplanswillbeofferedbetterdeals

British Gas owner Centrica is scrapping standard gas and electricity tariffs (SVT) for new customers ahead of UK Government plans to impose a price cap on the costly energy products.

The “Big Six” energy supplier also vowed to introduce simpler bills and a new fixed-term default tariff for customers who do not shop around once their deal finishes.

It said the reforms would be enforced by the end of March.

It came as the energy giant called on the UK Government and Ofgem to engage over the reforms to help create a fairer market without price controls.

Centrica urged the energy watchdog to follow its lead and remove SVTs from the market to encourage more customers to switch.

While group chief executive Iain Conn recognised the need for the market to improve, he said price caps would set the industry back.

He said: “Today we have set out the unilateral actions we will take to improve the UK energy market for our customers.

“This starts with the withdrawal of the standard variable tariff which contributes to lower levels of customer engagement.

“We also believe that further measures by Ofgem and the government are required so that together we can create a market that works for everyone, where there is improved transparency and a fairer allocation of costs currently included in the energy bill.

“We have long advocated that the end of the standard variable tariff is the best way to encourage customers to shop around for the best energy deal.

“But we also need a fairer way to pay for the changing energy system by removing government policy costs from energy bills.”

Britain’s Big Six are bracing for a raft of regulatory changes after the government announced a price cap will be imposed on poor-value energy tariffs.

It follows an investigation by the Competition and Markets Authority (CMA), which found 70% of Big Six customers are on pricier SVTs and could save £300 by switching to cheaper deals.

Around 4.5million of Centrica’s 8.3million customers – or about 60% – are currently on SVTs, with 70% of profits coming from the company’s SVT customer base.

Among the reforms, Centrica said it will provide customers with a range of competitive fixed-term tariffs, with no exit fees pinned to the default – or emergency – tariff. It will also target SVT customers with better deals.

A spokesman for the Department for Business, Energy and Industrial Strategy said: “Centrica’s decision to put an end to poor value tariffs is an encouraging first step in helping to create a fairer energy market.

“We will not rest until we see the £1.4billion consumer detriment identified by the Competition and Markets Authority addressed – which is exactly why we published draft legislation to cap tariffs last month.”

An Ofgem spokesman said suppliers needed to do more to help customers on poor value SVTs swap.

The watchdog added: “Centrica’s proposals are a step in the right direction. But they must lead to inactive customers genuinely benefiting from a significantly better deal, and not just a rebranded poor value tariff.”

“Wealsoneeda fairerwaytopay forthechanging energysystem”