British Gas owner Centrica is scrapping standard variable tariffs for new customers. The energy firm says it will offer simpler fixed-term deals.
Chief executive Iain Conn said the reforms were not triggered by a government-announced price cap. The cap in question tackles poor-value tariffs charged by the big six energy firms. He urged ministers to cut green energy subsidy costs from household bills.
Speaking on BBC Radio 4’s Today programme, Mr Conn announced, ‘a comprehensive set of actions to reform the market’.
Centrica will scrap standard variable tariffs for new customers. It will offer a fixed-term default tariff for all gas and electricity customers.
Mr Conn urged the government to follow suit by banning open-ended contracts. He also called for a rethink on green energy costs.
He said: ‘The cost of renewable policies and other government subsidies and incentive schemes has now reached over £5billion a year. It’s going to be costing next year, in our estimate, about £200 in everyone’s bill, that’s getting on for 20 per cent.
‘We think it’s much fairer to find another way of paying for it because people who find it most difficult to pay for their energy are really struggling with this component.’
The rising pressure on household budgets that government is seeking to address is reflected by the steady stream of customers switching to smaller energy providers. Streams of customers are flowing from the ‘Big Six’ suppliers like Centrica, into the arms of cheaper, independent providers.
Latest data from trade association Energy UK showed 600,000 customers switching energy account in October, an 11% year-on-year rise.
And worryingly for the likes of British Gas, almost a third of swappers in October moved to a smaller supplier. Clearly Centrica may have to continue with further rounds of profit-sapping tariff reductions to stop its customers base steadily evaporating.
The number of accounts on its books fell a further 4% between January and June from the same 2016 period, to 25,450.