British Gas falls short on promised £35 savings

British Gas said this week that it is cutting the average annual energy bill by £35 – but you could save much more by switching to a cheaper tariff.

The energy giant is cutting gas prices by 5% from 27 August, benefiting 6.9 million customers on Standard and Fix & Fall tariffs. However, many experts say this reduction does not come close to matching the £200- to £300-plus savings that can be achieved by switching to one of the best-buy fixed deals.

 Joe Malinowski at energy price comparison website TheEnergyShop.com says: “Stick with British Gas and you’ll get a saving of £35. Switch to the cheapest fixed tariff and you’ll save up to £335. That is not a tough call to make.”

 Millions of people are overpaying for their energy – earlier this year the Competition and Markets Authority calculated (pdf) that between the start of 2012 and spring 2014 more than 95% of dual-fuel customers of the big six energy companies could have saved money by switching supplier or tariff.

The average saving they could have achieved was put at between £158 and £234 a year. But part of the problem is that many people seem to find a reason not to switch (it’s too much hassle/it’s not worth it/I don’t understand energy bills/who do I switch to? etc), or simply never get round to it. British Gas’s standard dual fuel price for someone on typical usage will drop to £1,120 or so when the newly announced cut takes effect.

 However, Martin Lewis at Money SavingExpert.com says: “Even if you don’t want to switch company, if you switched to Sainsbury’s Energy, which is just British Gas under another name, you could cut your price to £930 a year.”

 Sainsbury’s Energy is a “partnership” between the supermarket giant and British Gas and the £930 average annual cost figure relates to its Fixed Price July 2016 tariff, which it describes as “our cheapest tariff for average consuming customers”. Advertisement This is a good deal but it’s not the cheapest available.

 The cheapest fixed deals, according to comparison site Gocompare.com, include SSE’s 1 Year Fixed, with a typical annual cost of £899; Fresh Fixed Price Nov 2016 v1 from new energy supplier extraenergy (£912); Flow Energy’s Connect tariff, with capped prices until April 2016 (£913); and iSave Fixed August 2016 from First Utility (£917). If you want a deal that offers 100% green electricity, Ovo Energy’s Greener Energy fixed tariff costs a typical £992 a year for dual fuel. This deal is fixed for 12 months.

 Caroline Lloyd at Gocompare says: “By the time British Gas hands over its 5% reduction on 27 August, standard tariff gas customers could already be reaping the benefits of an even cheaper tariff by taking advantage of the industry’s new faster switching and securing a best-buy fixed tariff deal.” British Gas says this is its second price reduction this year, bringing bills down by an annual average of £72.

theguardian.com