British Gas in hot water over new unlimited energy tariff
Britain’s biggest energy supplier has come under fire after launching its first ever “unlimited” energy tariff, with critics claiming it is poor value and would be bad for the environment.
British Gas is offering to supply households with gas and electricity for a fixed total annual bill, regardless of how much energy they use.
The supplier is marketing the tariff with a promise to offer “complete peace of mind”. Consumer experts said, however, that the deal for most households was likely to cost significantly more than other tariffs from the supplier.
Environmentalists said that the all-you-can-use energy deal sent out “the wrong message”. It could encourage households to waste energy, even though efficiency is crucial to tackling climate change.
British Gas supplies about 7.5 million households. It is facing a squeeze on its profits from the government’s energy price cap, which will force it to cut prices on its standard tariff for about 3.5 million households at the end of this year. The unlimited tariff was launched quietly on its website last Thursday.
It will not be covered by the cap and could lock households into paying higher prices.
The supplier is offering customers one of three fixed prices for both gas and electricity, depending on whether their energy usage over the past year was in a high, medium or low bracket. A household with typical usage would be offered a deal to fix their total bill at £1,200 a year.
If their usage remained at the same level, however, they would be better off opting for the supplier’s cheapest fixed-rate energy deal, which would work out at £1,035 a year.
British Gas admitted that a household with typical usage would need to use 19 per cent more energy over the coming year to be better off with the unlimited tariff rather than its fixed-rate deal.
Experts said that was especially unlikely given that most households used more energy than normal over the past year during the long, cold winter.
Even households on the expensive British Gas standard tariff, at present £1,205 a year, might not be better off since the price cap will cut that to £1,136 a year, although experts believe that the cap is likely to rise again in the spring.
The supplier said that the unlimited tariff “offers customers certainty on what they will pay each month no matter how much energy they use”.
The proposition comes weeks after Britain’s second-largest supplier, E.on, launched a similar tariff that would fix bills for a typical household at £1,224 a year. Guy Anker, deputy editor of the consumer website Money Saving Expert, said: “Energy companies try to sell peace of mind but quite often that so-called peace of mind comes at a huge cost. Quite frankly these are expensive tariffs and most people should stay well clear of them.”
British Gas has tried to head off environmental concerns by promising to buy renewable electricity equivalent to the volumes used and paying for programmes in developing countries to offset double the carbon footprint of the gas used.
Doug Parr, the chief scientist and policy director at Greenpeace, said that energy efficiency was “a critical part of the mix” for the world to hit climate goals and reduce emissions.
The British Gas tariff sent the wrong message, he said. “We want renewable energy to be displacing fossil fuels,” he said. “We don’t want it to fuel excess consumption.”
The unlimited offer is subject to various conditions including households agreeing to have a smart meter installed, giving automatic usage readings to the supplier, and a “reasonable usage” policy so that the energy is for their household’s usage only.
The company said that if a household was using over 50 per cent more energy than expected, it could get in touch to check that the terms were not being breached. The tariff could prove useful for savvy customers if they knew that their energy usage was likely to increase very significantly over the coming year.
News Source: The Times