“British Gas announcing a price rise as they make half a billion in profit is the ultimate slap in the face for families.”
“Standard tariff now costs £286 a year more than the cheapest deal on the market.”
“British Gas claim the price rise is because of increased costs but Ofgem data shows that all their costs – wholesale, network and policy – have dropped by 9% since December 2016”
Today (1st August 2017) British Gas, the UK’s largest energy supplier, announced a 12.5% increase in their electricity prices. This will mean families paying £76 more a year from September 15th. British Gas’s standard tariff paying by direct debit now costs on average £1,120 which is £286 more than the cheapest deal on the market.
British Gas also announced a £489 million in profits on its domestic customers during the first half of 2017. Iain Conn, head of British Gas’s parent Centrica, received a 40% pay rise in 2016 making his total pay £4.15 million.
This morning speaking on the Today programme, Iain Conn said “it is transmission and distribution and government policy costs that are driving our price increase.” However, the Big Deal’s own research using Ofgem data shows that British Gas should be cutting bills as the overall costs for energy companies – including wholesale, network and policy costs – have fallen by 9% since December 2016.
Responding to British Gas’s price rise, Will Hodson, co-founder of consumer collective The Big Deal, said:
“British Gas announcing a price rise as they make half a billion in profit is the ultimate slap in the face for families. Their standard tariff now costs £286 a year more than the cheapest deal on the market.
This price rise is completely unjustifiable. British Gas claim the rise is because of increased costs but Ofgem data shows that all their costs – wholesale, network and policy – have dropped by 9% since December 2016. They should be cutting prices not raising them.
“This price rise unfairly hits millions of ordinary families in the pocket while British Gas makes hundreds of millions in profit and their executives take home millions in pay packages.
Without government action, the Big Six will continue to bring in these ludicrous price increases. The government must implement the price cap to stop these companies taking consumers for a ride.”
Notes to editors
New research shows that British Gas should be cutting bills by 9% not putting them up. Analysis of energy regulator Ofgem’s Supply Cost Index by collective switching site the Big Deal shows that since a peak in December 2016 the costs for energy companies have fallen by 9% mainly due to a drop in wholesale prices.
The index tracks ongoing trends in wholesale costs, network costs and the charges to suppliers associated with government programmes that are designed to, for example, help deliver low carbon electricity and energy efficient homes, and provide direct financial support to the fuel poor.
British Gas first announced a price freeze in December 2016 and later said that they could freeze prices “despite increases in external costs [wholesale prices], because we have significantly reduced our own costs.”
Now that those external costs have dropped there is no reason for British Gas to raise prices. Instead they should be passing those reduced costs on to the customer in lower not higher bills.
Ofgem Supplier Cost Index between December 2016 and January 2016
|Month||December 2016||January 2017||February 2017||March 2017||April 2017||May 2017||Cut in costs between December 2016 and May 2017|
|Supplier Cost Index for Dual Fuel||104.7||98.5||101.9||100.1||96.3||95.7||8.6%|
Source: Ofgem Supplier Cost Index
Ofgem Supplier Cost Index shows a 9% decrease in wholesale prices for a dual fuel customer between December 2016 and May 2017. https://www.ofgem.gov.uk/electricity/retail-market/retail-market-monitoring/understanding-trends-energy-prices#thumbchart-c8329010666635703-n106412
British Gas’s press release on their price freeze – https://www.britishgas.co.uk/media/r/1454/british_gas_extends_its_price_freeze
Ofgem stats say that 6,639,056 (74%) of British Gas’s customers are on the standard tariff. https://www.ofgem.gov.uk/consumers/household-gas-and-electricity-guide/understand-your-gas-and-electricity-bills/energy-plans-what-standard-variable-rate-tariff-and-how-does-it-compare
British Gas makes half a billion in profit and CEO of Centrica earns £4.15 million
British Gas made £553 million in profits during 2016, while losing over 400,000 customers. Iain Conn, head of British Gas’s parent Centrica, received a 40% pay rise in 2016 making his total pay £4.15 million.
About The Big Deal
TheBigDeal.com is a consumer collective focused on reducing people’s energy bills. We bring together tens of thousands of consumers and use our collective buying power to create exclusive deals.
Launched in March 2014, we now have over 350,000 members and continue to grow. 62% of our members have never or hardly ever switched before – these are the very people who have been let down by the energy market for too long. Moreover, 60% of our members are over the age of 55 and 30% over the age of 65. We have saved the British public over £15 million since we launched.
TheBigDeal.com is a start-up business and charges a commission to energy companies. Unlike price comparison websites we are 100% transparent and publish the exact amount of our commission. For our most recent switch it was £50 for a dual fuel (both gas and electricity) switch. This compares to £60 to £100 for the main price comparison websites.
Sign up below to hear about our next deal!