British Gas hikes energy bills by £119 for more than 3m households

Customers to be hit with 10.5 per cent price rise from 1 April

An average household on British Gas’s standard variable tariff will see its gas and electricity bill rise to £1,254 (PA)

British Gas is to hike gas and electricity bills for more than 3 million customers after increasing its standard variable tariff to the maximum allowed by a government price cap.

The UK’s largest energy supplier has become the latest of the Big Six to increase prices, following announcements from E.On, EDF and Npower last week.

Changes will come in on 1 April and apply to standard variable tariffs (SVTs) which customers are often put onto by default after their fixed-price deal expires.

British Gas customers on SVTs will see bills rise 10.5 per cent, which means a £119 per year increase to £1,254 per year for a dual-fuel household with “typical use”. Customers who use more will pay more and vice versa.

The move is expected to add a cumulative £409m to the bills of customers on SVTs, which are among the most expensive rates on the market.

Suppliers have been responding to energy regulator Ofgem increasing its price cap for default energy tariffs.

The cap was introduced in order to help customers struggling to cope with price rises and to help prevent customers being penalised for remaining loyal to their provider. Energy companies argued that the price had been set too low and failed to take into account recent rises in wholesale gas prices.

Critics argue that it has reduced choice as companies have simply withdrawn some of their best tariffs and increased their SVTs to the level of the cap.

Npower last week raised prices for 1 million SVT customers by 10 per cent to £1,254 – the same price as British Gas. EDF also increased its SVT by 10 per cent to £1,254 for a typical household.

The best deals will continue to be available to those who switch supplier. Customers who move to the cheapest tariff could save more than £300 on their bills.

Richard Neudegg, head of regulation at uSwitch.com, said British Gas’s increase should “surprise no one”.

“Bill-payers on standard tariffs cannot be ‘protected’ by a cap that will change every six months – these customers sit at the mercy of a spreadsheet,” he said.

“Eight million households already know they’ll be part of possibly the largest energy price rise ever to happen on a single day when the new cap kicks in on 1 April.”