British Gas Standard Variable Tariff to increase

RNS Number : 1769X

Centrica PLC

08 August 2018

 

8 August 2018

Centrica plc ('the Company')

British Gas Standard Variable Tariff to increase due to rising wholesale costs

·     The British Gas Standard Variable Tariff (SVT), which was withdrawn for all new customers on 31 March, will increase for existing customers on 1 October by 3.8%.

·     This takes the average bill for a typical dual fuel customer to £1205, just below the average of the SVTs for the larger energy suppliers, and represents an increase of £44.

·     We are increasing our prices because of an approximately 20% rise in the costs of buying wholesale energy since April, as Ofgem cited when they announced an increase in the level of the prepayment meter cap on 7 August.

·     We will contact 3.5m customers who are affected so they know how their prices will change and let them know about our alternative fixed-term offers.

·     2.4 million customers on fixed price products will be unaffected by this price increase.

This price change is due to the rapid increase in wholesale energy costs since early April, when we last announced an increase in the Standard Variable Tariff. Until now we have been able to shield customer bills from the full impact of the increase in wholesale costs because of the way we buy energy in advance.

Since we withdrew our SVT to all new customers in March, any customers who don't actively choose a new tariff upon expiry of their existing fixed-term contract will roll on to our new default 12-month fixed-term Temporary Tariff. The Temporary Tariff will be priced at £1180 for a typical dual fuel customer from 1 October, £25 less than our SVT and well below the average of the larger suppliers.

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.

Mark Hodges, Chief Executive, Centrica Consumer said:

"We have today reluctantly announced plans for an increase in our Standard Variable Tariff (SVT). 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.

As well as providing more choice, we are striving to improve customer service levels, reducing our own costs and rewarding customers. Our British Gas Rewards programme now has more than one million members taking advantage of offers which reward loyalty and encourages engagement."

ENDS

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Centrica plc is listed on the London Stock Exchange (CNA)
Registered Office: Millstream, Maidenhead Road, Windsor, Berkshire SL4 5GD

Registered in England & Wales number: 3033654
Legal Entity Identifier number: E26EDV109X6EEPBKVH76
ISIN number: GB00B033F229

Notes to Editors

1.     Larger Suppliers Standard Variable Tariffs

Supplier	Gas        (£)	Elec   (£)	Dual Fuel (£)
OVO Energy	547	603	1150
BG SVT until 1 October	580	582	1161
Utility Warehouse	584	617	1175
BG Temporary October 2019	588	592	1180
SSE	578	618	1196
First Utility	538	661	1199
BG SVT from 1 October	598	607	1205
E.ON	591	617	1208
ScottishPower	584	627	1211
Co-operative Energy	622	597	1218
EDF Energy	581	647	1227
Npower	589	641	1230
Average excluding BG*	581	628	1208
* Average weighted on market shares

2.     Wholesale Prices - wholesale prices have moved up significantly since early April 2018.

Reference Period	Wholesale Commodity Price Gas (p/th)                                                                   Electricity £/MWh
9 April 2018	49.90	48.50
26 July 2018	60.29	57.18
% Change	21%	18%

ICE (Intercontinental Exchange) prices - demand weighted average for Winter 18 and Summer 19.

3.     On 7 August Ofgem announced an increase to the level of prepayment meter cap and WHD safeguard tariff by £47 from £1089 to £1136. This will affect 1.6 million British Gas customers on these tariffs.

4.     The introduction of the Price Cap from 1 January 2019, will see customers on SVT and temporary tariffs subject to Ofgem price reviews twice every year. 

 

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