The end of rip-off energy tariffs? Don’t be fooled!
British Gas has announced it’s going to kill off its rip off standard variable tariff for energy.
The standard variable tariff (SVT) is the most expensive price customers are rolled onto whenever a fixed-price deal ends.
The big majority of British Gas energy customers are on this tariff and are paying hundreds of pounds more than they need to for energy, simply because they haven’t shopped around for a better deal.
The owners of British Gas, Centrica, say they will phase the tariff out before March 2018 for new customers.
The SVT has come under fire from consumer champions, including A Spokesman Said.com and the government recently announced it plans to introduce a price cap on what customers can be charged.
Centrica is the UK’s biggest supplier of electricity and gas to homes, and its announcement is likely to set a trend for other companies, especially the Big Six, to follow, industry experts believe.
The company said it believes the move will deliver a fairer, more competitive and sustainable energy market.
“We fully recognise that the energy market can and should be improved, but further price controls will only set this back,” said Centrica chief executive Iain Conn.
“We believe more action is needed and are ready to play a leading role,” he added.
He withdrawing SVTs was the best way of encouraging customers to shop around for the best energy deal.
“Politicians, regulators and energy companies acting together can do better than simply imposing a temporary cap or freezing household energy bills,” said Mr Conn.
“Working in partnership, we can create a fairer, more competitive energy market for the long-term.”
Maybe – but we think it won't work quite like that.
So, what’s the catch?
All this has only come about because Centrica knows the writing is on the wall for SVTs. If it really had its customers’ interests at heart, it could have scrapped them years ago.
There are a few things to be aware of.
One, this is only for new customers. So, if you’re a British Gas customer right now, we suggest you check whether you’re on a rip off deal by checking out the market.
Two, it only kicks in by the end of March next year – so, that’s four months of overpaying if you take no action in the meantime.
And, three, what does ‘scrapping’ the SVT actually mean?
Well, it means that British Gas will write and tell you when a fixed rate deal ends and that you should see what else is on the market. But they do that now!
Right now, if you do nothing, you are switched to an SVT and overcharged. From the end of March next year, if you do nothing, you’ll be switched to “12-month emergency default tariff’ with no exit fees.
Sounds a lot like an SVT to us.
What you can be sure of is that it won’t be the best deal on the market for you.
There’s simply no substitute to shopping around and switching. Loyalty never pays!
Are you paying too much for your energy bills?
We compare prices from the Big 6 and many other energy suppliers, getting you the very best price.