Millions of British Gas customers on standard variable tariffs (SVT) will be hit by an inflation-busting 3.8% increase from 1 October.
This is the provider’s second increase in just six months and follows a 5.5% hike announced on 10 April.
British Gas says this will affect 3.5 million customers on SVTs, although those on fixed-rate tariffs will be unaffected. According to the company, it has been forced to hike prices again due to soaring wholesale energy costs.
The cost of the average SVT will rise by £44 to £1,205 per year. British Gas closed its SVT to new customers on 31 March. Any customer on a fixed-term contract will roll on to a new 12-month fixed-term temporary tariff instead. The average cost of this tariff will rise from 1 October to £1,180.
The news of a second price hike comes hot on the heels of Ofgem’s announcement yesterday of a £47 increase on its safeguard tariff, which caps costs for the most vulnerable households.
Mark Hodges, chief executive of British Gas’ parent company Centrica Consumer says: “The reason for this increase is due to an approximately 20% rise in wholesale energy costs since early April, when we last announced an increase in the SVT.
“We actively want our customers to choose alternatives to the SVT and we provide many opportunities for them to consider new 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.”
How other energy suppliers are upping prices
Here’s how other major energy providers are increasing prices this year:
- British Gas customers first saw prices rise by 5.5% from 29 May.
- Bulb customers will see prices rise by 5.1% from 12 August, after already being hit with a 2.8% price hike from 28 April.
- EDF customers saw prices rise by up to 3.5% from 7 June and it’s increasing prices again by 6% from 31 August.
- Npower customers saw prices rise by 5.3% from 17 June.
- Ovo customers saw prices rise by 5.1% from 8 June.
- Scottish Power customers saw prices rise by up to 6.9% from 1 June.
- SSE and M&S Energy customers will saw prices rise by up to 6.7% from 11 July.
British Gas hike is a 'pricing tactic'
Stephen Murray, energy expert at MoneySuperMarket, comments: “Today’s announcement by British Gas of a further £44 price hike for its standard tariff customers is the latest in a long line of increases this year.
“It’s true that wholesale energy costs have risen markedly this year, prompting this raft of hikes. But this latest increase from British Gas can also be seen as a pricing tactic ahead of the imposition of the government-led price cap, which is on its way this winter.
“British Gas found itself the cheapest of the Big Six by a margin after the round of price rises earlier this year, and this latest move will align it with its main competitors, ensuring it’s in a similar position to its peers ahead of the much-vaunted cap.
“The message then and the message now is to switch to a cheaper fixed deal and save over £250 – way more than even the most optimistic advocates of the cap are forecasting.”