Yahoo Finance British Gas is scrapping pricier standard variable tariffs from next April
British Gas is scrapping its standard variable tariff in a move that could see 6 million customers get cheaper bills.
From next April, the often more pricey SVT will be no longer be offered to new customers.
And the company says it will be “proactively” seeking to move current customers onto fixed tariffs as and when there current energy contracts finish, rather than defaulting onto a SVT.
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E.On has already said SVTs will no longer be the default option for customers coming to the end of their existing tariffs.
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.”
Speaking to the Today show on BBC Radio 4, Conn added: “We will contact all of our customers at least twice a year to encourage them to move away from the SVT.”
However, and crucially, those customers currently on a SVT still had to decide to exit that rolling default charge – leaving the SVT customer locked into a SVT unless they chose to move.
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Conn said the real solution would be for the government to prohibit “evergreen” contracts with no end date, which leave unsuspecting customers paying more than they need to because they haven’t explored alternatives.
The other issue Conn said needed to be addressed was for the government to find a “fairer way” to fund investment in renewable energy.
He said current subsidies cost consumers £200 a year on their energy bills.
“These trade-offs are really difficult … clearly the money has to come from somewhere, but right now it’s unfair for people who can least afford it having to pay,” he said.
The company said it had already made “good progress” having contacted all British Gas SVT customers in the first half of 2017, with 10% switching away from the SVT.
“For as long as customers remain on legacy SVTs we will ensure they continue to be priced competitively. We will publish the number of SVT and default customers we supply twice a year alongside our financial results,” it added.
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The move comes weeks after draft legislation designed to lower the cost of energy bills was published by the government.
The Draft Domestic Gas and Electricity (Tariffs Cap) Bill would give energy regulator Ofgem the power to cap SVTs.
