British Gas has announced it will freeze gas and electricity prices for more than six million customers this winter. Those on standard tariffs will benefit from the move, with prices being held at current rates until March.
The UK’s biggest energy provider follows SSE, which froze prices last month until at least April. British Gas said the price freeze would give “peace of mind” to consumers.
The competition regulator said in June that the Big Six energy suppliers were exploiting customers’ loyalty by overcharging them on expensive tariffs, when cheaper options were available. The watchdog also said companies were making six times more profit than they publicly declare.
Six months after the report, British Gas has now said it will ensure all existing and new customers can access its best deals. It also promised “energy health checks” for standard variable customers, which it says will ensure they are on the correct tariff.
Gas and electricity companies have repeatedly been accused of acting anti-competitively by raising prices in unison and taking months to lower them again when wholesale prices drop.
Energy prices have risen sharply in recent months, with the annual cost to supply a four-bedroom home now at £1,494. Four million UK households are struggling to pay their energy bills and almost half plan to cut their energy use this winter because of worries they cannot afford it, according to price comparison site, uSwitch. Of the 2,000 families surveyed 29 per cent said they will keep the heating off, even when their house is cold.
In a Christmas message to customers, British Gas pointed out that its standard variable tariff was already the second cheapest in the market.
Some analysts had reservations about the announcement, however. Mark Mark Todd, co-founder of Energyhelpline said: “In what has been a turbulent week for the energy market, British Gas’s price freeze on its standard tariff is a small victory for consumers. However, standard tariffs from any supplier tend to be the least affordable means of securing energy. They are disproportionately expensive in comparison to some of the other tariffs available on the market. The standard tariff has now become nothing more than an expensive fix. Customers can easily find more affordable alternatives by switching.”
“Just by switching away from the British Gas standard tariff, on average customers could save £181 with the Places for People fixed 39 tariff (below). As is always the case, savvy shoppers find the best deal by doing their research and never agreeing to pay more than they need to.”
Business Secretary Greg Clark recently met energy company representatives to discuss concerns that they were abusing customer loyalty following a report commissioned by industry lobby group Energy UK.
The report found the cost of supplying a home with gas and electricity “falls well below” what households pay, with profit margins of up to 28 per cent.
But wholesale energy prices have been rising, leading to the collapse of smaller provider GB Energy earlier this week.
It had recently hiked tariffs by as much as a third, while other small suppliers have also had to increase prices.
GB Energy's 160,000 customers have since been taken on by Co-operative Energy, which is honouring outstanding credit balances and tariffs for GB’s customers.
Additional reporting by PA
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies