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UK Centrica Pushes up Prices
The UK's largest domestic energy retailer Centrica is putting up the standard variable tariff (SVT) by an average 5.5% from the end of May, it said April 10.The increase, which will affect 4.1mn gas and electricity customers and would average £60 ($85) on an annual bill of £1,161, was "largely due to rising wholesale and policy costs. Similar pressures were cited by [market regulator] Ofgem when they increased the prepayment meter cap by just over £57 April 1," the company said.
UK energy minister Claire Perry said she was disappointed by the "unjustified" Centrica price increase, which was also condemned by the opposition Labour party. The latter however also said that, had the government's planned cap on energy prices had taken effect by now, instead of later this year, then Centrica's price hike could have been blocked.
Centrica, which sets its own prices and could have chosen to absorb the higher costs to retain its customers, has had a difficult time lately, with a loss of market share and a wave of redundancies announced in February that triggered a share price crash.Customers on fixed contracts, or prepayment meters and the vulnerable, 3.7mn in all, will not be affected. The 'British Gas SVT default tariff' was withdrawn for new customers March 31 by Centrica, which says it has since been contacting them to encourage them to choose a fixed-term deal and has introduced a new default tariff which will also go up that amount in May 29.
It said government should "level the playing field so the customers of all suppliers pay a fair share of energy policy costs. We continue to encourage government to consider moving these costs out of energy bills altogether and into general taxation." It also urged Ofgem to end the SVT across the market which would encourage customers to proactively seek the best energy deal for them.
Centrica expects 1.3mn customers to choose to switch to one of its fixed-term tariffs this year, saying it signs up thousands of customers/week to British Gas Rewards, to reward loyalty and improve engagement. It also said it was continuing to drive down costs and targeting additional cost efficiencies of £20/dual fuel customer by 2020.