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British Gas pledges better bill transparency

'We haven't made it easy for customers in the past,' it admits

British Gas became the latest "big six" electricity and gas provider to acknowledge a lack of public trust in the energy industry as it promised to simplify energy tariffs and provide a more transparent billing system yesterday.

The Centrica-owned supplier will offer two tariffs – one variable and one fixed – and provide customers with a complete breakdown of the costs that make up their bills.

Phil Bentley, British Gas's managing director, admitted that his company "had not made it easy for customers" in the past and said he would be informing customers of the changes by letter.

"It's clear that we need to make things better for our customers. To make sure that we do that, I'm committed to having an honest conversation. We are very conscious of our social responsibility. It's not right if we are charging honest customers more," Mr Bentley added.

Ofgem welcomed the move, saying that British Gas had recognised the need for an "open and honest dialogue" with its customers.

"As part of urgently restoring confidence we are calling on all suppliers to get behind Ofgem's reforms to deliver what consumers tell us they want – a simpler, more competitive energy market," Ian Marlee at Ofgem said.

The move by British Gas follows pledges made by SSE on transparency last month and E.on's announcement this week that it was "pressing the reset button" as to how it operates.

Politicians, regulators and consumers have been piling the pressure on the dominant energy providers in recent weeks, after soaring wholesale gas costs prompted them to hike domestic energy price hikes, putting further pressure on cash-strapped customers.

Ofgem, the industry regulator, inflamed the situation last month as it published new research which estimated that the big six's annual profits had leapt from £15 to £125 a household since June, on the recent price rises.

Although the big six vigorously denied the profit margin – and Ofgem admitted that further rises in wholesale prices would probably bring it down in the coming months – the regulator's research nonetheless intensified the pressure on the dominant energy providers.

Ofgem accompanied its research with a pledge to clamp down on the complex system of more than 400 tariffs, arguing that they stifled competition by confusing customers.

It proposed forcing suppliers to offer a single "no-frills" tariff, with a "standing charge" per unit, on top of which the energy suppliers would have to offer a variable price per unit, making bills clear and price comparison easier.

Adam Scorer, a director at Consumer Focus, said: "The penny has dropped. Reducing the number and complexity of tariffs won't bring prices down by itself, but it will help people understand their energy costs and get the best available deal."