Energy News

British Gas promises to simplify energy tariffs

Thursday 24 November, 2011

By Martin Fagan

Director says “mistrust” of energy suppliers means consumers would appreciate and benefit from more transparent bills.

British Gas says it is simplifying its tariff structure because consumers have in recent times not trusted energy suppliers to honestly offer the best deal for their needs.

Speaking to the BBC, British Gas managing director Phil Bentley said his company "had not made it easy for customers" in the past.

As a result, he said all customers will in future be able to choose between two tariffs - variable and fixed - and benefit from more transparent bills.

Energy regulator Ofgem is pressing for all the “big six” energy suppliers to radically reduce the number of tariffs available. According to consumer watchdog Consumer Focus, over 70 new tariffs have been launched so far this year by energy companies, and there are now some 400 tariffs on the market.

But consumer confusion is not just down to the number of tariffs available, but also the complexity of how the billing is structured. In September this year, Which? asked 36 people - including a solicitor, an engineer and an accountant - to work out their domestic energy bill using nothing but information from the supplier's website. Just one - a company director - could do it.

As well as offering just two tariffs, British Gas’s Phil Bentley said that, from this month, it will include a "complete breakdown" of all the costs that make up its customers' bills.

Bentley also admitted that, in the past, British Gas had offered cheap loss-making deals in order to attract customers because the deals would ensure British Gas would top the price comparison tables. "It's not right if we are charging honest customers more [to fund these deals]," he said, adding the company would no longer be doing this.

“The penny has finally dropped,” said Adam Scorer, director of policy and external affairs at Consumer Focus.

“We welcome the news that energy companies recognise that the ways in which they have constructed and sold tariffs has confused, antagonised and alienated consumers.

“Energy is a simple product; it should also be a simple market. Reducing the number and complexity of tariffs won't bring prices down by itself, but it will help people understand their energy costs and get the best deal available.”

Over the summer, British Gas increased gas prices by 18% and electricity prices by 16%, adding an average of £200 extra a year to customers’ bills, blaming wholesale gas prices for the hike. British Gas says it will be writing to all of its customers explaining the tariff changes and how they will be affected by them.