Millions of British Gas customers to see bills rise by 12.5% - but this is how you can avoid it

British Gas - PA/Wire
British Gas - PA/Wire
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British Gas has announced it is to hike its electricity tariffs by 12.5% in September in a move affecting 3.1 million customers.

The Big Six energy giant confirmed the price rise, which will take effect on September 15, after a blunder on Monday saw the group mistakenly publish an incomplete statement about increasing electricity tariffs on its website.

Centrica-owned British Gas said the price rise is its first since November 2013 and the group pledged to help protect more than 200,000 vulnerable customers from the increase.

The price hike will mean an average dual fuel bill for a typical annual household tariff will rise by £76 to £1,120 - a 7.3% increase, according to British Gas.

A spokeswoman for the Department for Business, Energy and Industrial Strategy said: "Energy firms should treat all their customers fairly and we're concerned this price rise will hit many people already on poor-value tariffs."

Why are prices going up?

Details of the increase comes as British Gas owner Centrica posted half-year results revealing that earnings from its consumer business plunged by more than a quarter after it lost 377,000 UK customer accounts in the first half.

Underlying operating profits from its UK home energy supply arm tumbled 26% to £381 million as the group said it was also hit by warmer than normal temperatures and the pre-payment tariff cap.

Centrica's overall underlying operating profits were 4% lower at £816 million for the six months to June 30.

The group said it held off from the price rise a for "up to six months longer than some of our competitors".

The group said it will give more than 200,000 customers receiving a warm home discount a £76 credit to offset the tariff increase.

British Gas is the last of the Big Six providers to increase prices after it promised in December last year to freeze tariffs until August.

The group insisted its overall electricity costs had increased by 16% since 2014.

But the move flies in the face of the Government, which made a pre-election pledge to introduce a price cap, although that has since been watered down to cover vulnerable households only.

Iain Conn, the chief executive of Centrica, told BBC Radio 4's Today programme that while the commodity price of electricity had come down, it was facing "significant cost pressure" on transmission and distribution, as well as costs associated with Government policy.

He added: "The net effect of both of these is an increase of about £62 on the average bill, and that is the main driver of the increase, combined with the fact that our electricity prices at British Gas have been some of the cheapest in the market, and actually we're now selling our electricity at a loss, which is clearly not sustainable."

Mr Conn went on to say the energy market "does need to be and could be reformed", but warned a price cap would reduce competition.

"We're actually proposing that the Government are even bolder and instead of capping standard variable tariff, they should reform it so that it's removed altogether so that contracts that don't have any end are actually phased out and that the level playing field is created so that all suppliers pay the Government's costs," Mr Conn said.

"Currently only the large suppliers pay these, and we don't think that's good for the market."

What you can do

Martin Lewis, of Money Saving Expert, believes that switching to a cheaper plan will help customers knock hundreds of pounds off their bill.

He said: "This is British Gas’ catch-up price hike. It was the only one of the big 6 firms not to raise prices at the start of the year, and now, as predicted, it’ll do it from September. And that means, if, (as is possible) we see another batch of rises this coming winter, its customers will feel like they been price-slapped twice in rapid succession.

"While this freeze has given people a little respite from price moves over the key high use winter period – the problem is for many the false sense of security that it wouldn’t move prices meant they did nothing, when they could’ve cut their rate, and locked that in for longer, by actively picking a far cheaper 1 year fixed energy tariff.

"So let this be a clarion call for British Gas customers (and all those on big 6 standard tariffs).

"Do not sit on your backside and just take this. For someone with typical use, on British Gas’ standard tariff you're going to be paying £1,120 a year from September.

"The cheapest tariffs on the market are £840 for the same usage. And switching is usually no big deal - there’s no break in service, no engineers coming to call - it’s the same gas, same electricity, same safety – only the price and who provides customer service actually changes."

Find the cheapest deal at www.cheapenergyclub.com.

Paula Dillon, President of Leeds Chamber Commerce.

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