The Big Six energy supplier British Gas lived up to its words and has kicked out Standard Variable Tariffs for its nwww ew customers. According to energy experts, the announcement that will come into effect from April 2018 is a result of the government’s constant pressure to apply energy price cap on SVTs. The Big Six gas and electricity providers were already under scrutiny for earning huge profits from customers on Standard Variable Tariffs and a cap on it was the most obvious solution to combat energy price rises and to dismantle the monopoly of the Big Six suppliers on the energy market.
Although, the energy price cap is expected to come in effect from winter 2018 the announcement has shook the energy market especially the Big Six energy suppliers. There was a strong opposition for the energy price cap from the Big Six suppliers but the government seemed unperturbed. To avoid any restrictions on them, the Big Six electricity and gas suppliers found a mid way out and suggested to abolish the SVTs. As of now, three of the Big Six gas and electricity providers including E.On, Scottish Power and British Gas have made the announcement and the rest might follow suit.
When confronted, British Gas shrugged off the claim that the government’s declaration for energy price cap is the reason behind scrapping SVTs. It informed that it has tried to convince its customers on SVTs to switch to cheaper energy deals but only 10% have shown interest. The company said it had called its SVT customers in the first half of 2017 but nothing seems to shake them. Therefore, the gas and electricity supplier will prompt them twice a year to make a move and switch to cheaper energy deals. The company makes major profits from its 5 million customers that are on SVTs, which forms 67% of its total client base. Nonetheless, the new customers that register with the company after the 1st April 2018 would not be offered SVTs.
For those on fixed energy deals, the company has plans to offer similar energy deals to them. If they show lack of interest then they would be shifted to default tariffs for the next 12 months. The Big Six electricity and gas supplier has not given any clarity about the default deals like whether it would be a variable contract or even if it would be a cheaper energy deal than SVTs. As per energy regulator Ofgem, British Gas offers the lowest SVTs when compared to the other Big Six energy suppliers. By abolishing SVTs the company would certainly prove affordable for many more UK energy customers. All other energy plans offered by the UK energy supplier would be a form of cheaper energy deal than the current SVTs and thus, help the customer to save on energy bills.
Shay Ramani, founder of energy price comparison site FreePriceCompare shared his views on the matter, “Scrapping SVTs is a positive step by British Gas and would certainly help its customers. However, with no clarity about the default deals, one needs to be alert until further announcements to avoid any shock from the Big Six. Till then, energy customers should shop around and switch energy suppliers to get lower energy bills.”
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