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| British Gas scraps standard tariff for new customers | British Gas scraps standard tariff for new customers |
| (35 minutes later) | |
| Energy giant British Gas will scrap its standard variable tariff (SVT) price category by April for new customers. | Energy giant British Gas will scrap its standard variable tariff (SVT) price category by April for new customers. |
| It comes after draft legislation designed to lower the cost of energy bills was published by the government. | It comes after draft legislation designed to lower the cost of energy bills was published by the government. |
| The legislation would give energy regulator Ofgem the power to cap default tariffs. | The legislation would give energy regulator Ofgem the power to cap default tariffs. |
| Rival energy firm E.On has already said SVTs will no longer be the default option for customers coming to the end of their existing tariffs. | Rival energy firm E.On has already said SVTs will no longer be the default option for customers coming to the end of their existing tariffs. |
| SVTs are usually among the most expensive tariffs. British Gas is estimated to have about five million customers on the tariff, accounting for some 67% of its customers. | |
| Simpler bills promised | |
| Announcing the change, Iain Conn, chief executive of British Gas parent firm Centrica, said: "We have long advocated that the end of the Standard Variable Tariff is the best way to encourage customers to shop around for the best energy deal." | Announcing the change, Iain Conn, chief executive of British Gas parent firm Centrica, said: "We have long advocated that the end of the Standard Variable Tariff is the best way to encourage customers to shop around for the best energy deal." |
| Although the development only applies to new customers, Mr Conn said the company was keen to move all its customers off the SVT. | Although the development only applies to new customers, Mr Conn said the company was keen to move all its customers off the SVT. |
| "We will contact all of our customers at least twice a year to encourage them to move away from the SVT," he said. | "We will contact all of our customers at least twice a year to encourage them to move away from the SVT," he said. |
| British Gas contacted all its SVT customers in the first half of 2017, and it says that 10% switched away from the tariff. | British Gas contacted all its SVT customers in the first half of 2017, and it says that 10% switched away from the tariff. |
| The company has also said it will: | The company has also said it will: |
| Analysis: Brian Milligan, BBC personal finance reporter | |
| British Gas's decision to "withdraw" standard variable tariffs (SVTs) is unlikely to make much difference to most of its customers. More than two-thirds of them continue to pay for the more expensive tariff, despite cheaper alternatives, and despite numerous attempts to get them to switch. | |
| The company itself tried to contact all of them earlier this year, and only managed to persuade 10% of them to take out a fixed-term deal. This means that the remaining five million customers can stay on SVTs for as long as they like. | |
| British Gas has also said that fixed-term customers who fail to chose another deal will be put onto a default tariff. As yet we don't know the detail of that tariff. Indeed it could even be a variable rate tariff: In other words, another SVT. | |
| So this announcement confirms that the SVT is far from dead. | |
| 'Comprehensive actions' | |
| Mr Conn told the BBC's Today programme that it had been working on these proposals "for many months now". | Mr Conn told the BBC's Today programme that it had been working on these proposals "for many months now". |
| And he denied that action had been taken because of government threats to impose price caps on the energy market. | And he denied that action had been taken because of government threats to impose price caps on the energy market. |
| "We have been saying for the past 18 months that we need to end 'evergreen' contracts - those which don't have an end date," Mr Conn said. | "We have been saying for the past 18 months that we need to end 'evergreen' contracts - those which don't have an end date," Mr Conn said. |
| He said the new measures announced were "a comprehensive set of actions". | He said the new measures announced were "a comprehensive set of actions". |
| "But we also need a fairer way to pay for the changing energy system by removing government policy costs from energy bills," he added. | "But we also need a fairer way to pay for the changing energy system by removing government policy costs from energy bills," he added. |
| 'False sense of security' | |
| But some comparison websites questioned the detail, or lack of it, in what British Gas was proposing. | |
| Richard Neudegg, head of regulation at Uswitch.com, said: "These initiatives by British Gas have the potential to effect positive change for its customers, if it makes it easier for them to make choices about their energy. | |
| "However, what remains to be seen is if customers rolled onto a new fixed deal with British Gas end up finding themselves on another poor value standard tariff by another name." | |
| Peter Earl, head of energy at comparethemarket.com, said there was a danger "that getting rid of the worst deals will lull consumers into a false sense of security". | |
| "Not being on the worst deal is far from being on the best one - British Gas customers will not automatically find themselves on a competitive tariff." |