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British Gas to simplify energy tariffs

Energy provider announces plans to cut number of standing charges from eight to one

new british gas logoThe aim of the initiative is to make tariffs and bills easier for consumers to understand and improve transparency in the energy market.

Ofgem recently launched its Retail Market Review in a bid to add clarity to the market. The scheme aims to simplify the energy market for consumers by replacing the previous two-tier charge system. The latter meant consumers would pay a set energy rate until consumption passed a certain threshold, at which point a second cheaper rate is applied.

Energy suppliers have replaced the two-tier system with standing charges; set fees which cover the basic cost of supplying a home with power.

Single standing charge ‘by end of 2013’

British Gas released a statement on the new changes: “Following a review, British Gas will move to offering customers a single standing charge per fuel. This will apply to all new products launched from today.”

By the end of August, British Gas will have completed the rationalisation for all but one of its current products and will have one standing charge by the end of 2013.”

A confusing market for consumers

Research carried out by uSwitch revealed that energy suppliers in the UK currently apply 45 distinct standing changes depending on the tariff selected.  On average the difference between standing charges across select suppliers’ tariffs is £68. At present only EDF Energy applies a single standing charge across each of its tariffs. The UK’s other major suppliers have yet to comment.

Britain’s largest energy suppliers all raised power prices during the past winter. A situation which led Prime Minister David Cameron to call on Ofgem to ensure suppliers offered cash strapped consumers the lowest tariffs possible.

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