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20.11.2017 16:43
© Centrica
Centrica, Britain’s biggest domestic electricity and gas supplier, has set out plans to reform its pricing by withdrawing the most common form of tariff, the standard variable tariff, ahead of government intervention in the market.
The government said in October it would impose price caps on standard variable tariffs (SVT), the basic rate that energy suppliers charge if a customer does not opt for a specific fixed term deal, in a bid to drive down the amount customers pay.
Centrica said it would stop offering its standard variable tariff which is targeted by the government cap. “We fully recognise that the energy market can and should be improved, but further price controls will only set this back,” Centrica Chief Executive Iain Conn said.
Last year, the Competition and Markets Authority found that British households overpaid a total of 1.4 billion pounds a year on average from 2012 to 2015 because of uncompetitive standard energy tariffs.
Centrica said it would give customers a choice of at least two, three-year tariffs at the end of their contract period as part of an attempt to move all customers off SVT deals, improve customer service and simplify bills. It will also set up a new 12-month default tariff with no exit fees for customers that do not pick a new contract after their existing one expires. The changes would be introduced by March 31, 2018, it said.
Centrica also called on industry, government and the Ofgem regulator to address market failures and distortions and proposed funding energy policy costs through general taxation and not via bills.
Utilities have long said the bigger bills are partly caused by rising government energy policy costs, including renewable energy subsidies, Reuters reminded.
The supplier also called on the government to phase out SVT deals altogether and prohibit tariffs without an end-date, arguing that such deals reduce customer engagement.
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