British Gas Has Not Raised Prices

For those of us who use the Internet properly, British Gas has not raised prices at all.

Energy companies tinker with their many different tariff prices all the time. They add a few pence to one and take a few pennies off another. They can't help themselves. If the media wrote about all these changes there would be no room for columnists to write about celebrities or their political agendas. On the other hand, we also wouldn't be able to read about what's actually happening in the world, important happenings.

When you read about energy-price moves the article is usually about a change that affects all of the provider's tariffs, including the tariffs available to new customers. On this occasion with British Gas, however, it's different. British Gas's very expensive standard tariff went up even further yesterday, as has its green tariff, but its online tariff 'Click Energy 5' remains the same.

For most people, Click Energy 5 is the cheapest tariff available. I'd expect that anyone reading this uses the Internet to get the best deals so, as far as we're concerned then, BG has not raised prices, because we're not on the standard tariff.

Here are the numbers. A customer on British Gas' standard tariff might on average now pay around £1,300, but the same person on Click Energy 5 would pay just £870, which is an extraordinary £430 less.

Should you switch your tariff now?

British Gas has now removed its previous, cheap price-fix tariff (which my Foolish colleague, Laura Starkey, recommended in her article earlier this month) and replaced it with another which lasts till 2011. It claims that the new one is not 'at a premium', because it costs the same as its standard-energy tariff. But I think £430 or 50% more constitutes a significant premium.

British Gas also said it won't increase its standard-tariff price again this year, but, for the same reasons, it's a dreadful guarantee.

The other fixed tariff I've looked at today, E.ON's, seems to me to be expensive too. Fixed tariffs now factor in the huge increases in wholesale prices (the price that suppliers pay for the fuel they sell on to us) that are yet to happen, but are strongly expected. This means that you'll probably be better off not fixing our prices at present, and getting the cheapest normal tariff. I could be wrong of course, I don't know what'll happen to prices in the future, but my opinion is you'll be much better off if you don't fix at this time. (Laura Starkey disagrees with me, by the way.)

Why have prices gone up?

Rises in wholesale prices have been the biggest cause of recent increases in what we pay (the retail price). Ofgem, the energy-market regulator, has for some time been investigating wholesale prices. I'd be surprised if nothing dodgy was happening, but there are lots of legitimate reasons too. We have gas supply problems, we're increasingly reliant on importing gas as our reserves fall and we're competing for fuel with countries that require ever more energy supplies. Further, it's not in the interest of our suppliers to fight for more and better pipelines for importing gas.

Returning to something that is within our control, I have one more point for those of you who've moved home recently. When you move into a new home that British Gas supplies, you will be put onto the standard tariff. It's the same with all suppliers, and all of them charge a lot more for their standard tariffs. Therefore you should estimate your usage and find a better deal.

I have no room left to write about how the other suppliers have tinkered with their tariffs. I have no room left to discuss Amy Winehouse or Gordon Brown either.