British Gas has set itself a goal.
By abolishing standard variable tariffs it describes as “expensive” it will transform the market “and give customers a fairer, simpler deal and lower bills”. Its Consumer CEO claims the goal is within reach, but then in an unfortunate turn of phrase “we can’t get there unless suppliers, the Government, and the regulator work together” (1).
The firm claims that closing down never-ending tariffs will force people to take a fixed-term deal (“engage with the market” in economics-speak). They say: “You wouldn’t expect a car insurance policy to last forever. We believe that Energy customers should make their choice regularly”. (1) But this is false and disingenuous.
Nils Pratley points out: “Energy supply is not like home insurance. Companies have an obligation to supply and can’t simply switch off customers who are too lazy, or too baffled, to shop around. Those determinedly inactive punters still have to be charged something, and Centrica’s new emergency default tariff looks suspiciously like another SVT. just dressed in different clothes”. (2)
Dieter Helm, the independent expert, in his report for the prime minister, makes the same telling point: “There will always have to be a default tariff for those with better things to do than trawl the internet trying to comprehend the myriad ‘deals’ and ‘offers’.” (3)
Citizens Advice says consumers will still need additional protections and calls the government’s proposed energy price cap “a welcome opportunity to make the market work better for the 12 million people on rip-off default tariffs.” (4)
Martin Lewis, MoneySavingExpert.com, says BG’s move “could be smoke and mirrors. Instead of a default standard variable tariff people move to when the deal they chose ends, it will now have a standard default fixed-term tariff. Yet that could mean anything at any price.” (5)