British Gas to scrap standard tariffs ahead of looming price cap

Image Shutterstock

British Gas' parent company Centrica plans to abolish its most common form of tariff - the standard variable tariff - before Government intervention in the market takes effect.

"Politicians, regulators and energy companies acting together can do better than simply imposing a temporary cap or freezing household energy bills", said Mr Conn.

Centrica will scrap standard variable tariffs for new customers and offer a fixed-term default tariff for all gas and electricity customers.

It announced the shift as the Government moves to introduce price caps on SVTs - a default tariff that has no end date and is now used by 50% of United Kingdom homes.

Last month ministers brought forward legislation to cap the price of standard tariffs in a watershed moment for the sector after years of criticism over rising energy bills and low consumer engagement.

British Gas contacted all its SVT customers in the first half of 2017, and it says that 10% switched away from the tariff.

But, crucially, it said those customers now on an SVT still had to decide to exit that rolling default charge - leaving its existing SVT customer base locked in to an SVT unless they chose to move.

On Monday, Centrica, which is Britain's biggest domestic electricity and gas supplier, announced that it intends to phase the tariffs out, as part of a package of actions to reform the United Kingdom energy market.

While its big six competitors were yet to give their reaction, smaller rival Octpus Energy said the end of the SVT was a "ruse" as the most expensive current fixed rate British Gas was offering was similar in price to its SVT average. Mr Conn urged the government to follow suit by banning open-ended contracts and called for a rethink on green energy costs.

He said the new measures announced were "a comprehensive set of actions". But it also expects Government to revamp its approach to rising policy costs by including some in general taxation.

Related News: