British Gas hikes bills for second time this year, affecting 3.5 million UK households

Move follows Ofgem’s announcement that its safeguard cap would be increased by £47 a year

British Gas has announced it is hiking the price of its standard variable tariff (SVT), blaming rising wholesale costs.

The decision means 3.5 million UK households will receive higher bills from 1 October onwards.

Centrica-owned British Gas will raise its SVT by 3.8 per cent, which will take the average bill for a typical dual fuel customer to £1,205, which the company said is “just below the average of the SVTs for the larger energy suppliers” and represents an increase of £44.

This marks the second time British Gas has raised prices since the beginning of the year, after increasing its typical fuel bill by 5.5 per cent in April, a move that affected more than 4 million UK households.

The provider withdrew its SVT to all new customers in March, and said on Wednesday: “We actively want our customers to choose alternatives to the SVT and we provide many opportunities for them to consider our fixed-term deals. We expect to have only 3 million customers on the SVT by the end of the year, down from 4.3 million at the start of 2018.”

The latest hike from British Gas follows the news that energy market regulator Ofgem is raising the cap on its safeguard tariff, also in response to rising wholesale prices.

Rik Smith, energy expert at uSwitch.com, said this second price rise would be “a major shock to customers still licking their wounds from the hike announced just four months ago”.

“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 added.

Gillian Guy, chief executive at Citizens Advice, said that the second “significant” price hike would be a “bitter pill to swallow for hard-pressed British Gas customers”.

“Those people most likely to be on a standard variable tariff – including the elderly, people on low incomes and those with disabilities – will particularly struggle to cope with yet another bill increase,” she said.

“While the government’s proposed price cap should protect customers from the worst of these tariffs, anyone who isn’t happy with their energy company should think about switching tariff or supplier.”

Last month, British Gas revealed it lost 340,000 UK customers in the first half of 2018, which experts attributed to its bill increase earlier in the year.

In May, Centrica said it would cut 1,000 jobs this year, with a further 3,000 to go by 2020, due to political and regulatory intervention.

Mark Hodges, chief executive at Centrica Consumer, said: “We understand that any price increase adds extra pressure on customers’ household bills. However, this reflects the sharp rise in wholesale energy costs.

“In response to rapidly rising wholesale market costs, since April a number of other energy supply companies have increased their SVT prices and Ofgem have also announced a second increase to the prepayment meter cap.

“With more than 70 energy supply businesses now operating in the UK, the energy market is increasingly competitive and we are focused on offering all our customers attractive fixed and bundled deals.”

A Department for Business, Energy and Industrial Strategy spokesperson said: “It is disappointing that British Gas has announced another price rise in its default tariff at a time customers are already paying more than they need to. This is why the government is introducing a new price cap by this winter to guarantee that consumers are protected from poor value tariffs and further bring down the £1.4 billion a year that customers have been overpaying.”