British Gas will freeze the direct debits of 2m households over the winter to help customers manage the highest cap on standard energy bills since the regulatory measure was introduced in 2019.
The UK’s largest energy supplier confirmed it would raise the price of its default dual fuel tariff in line with the industry price cap, which will climb by 12% to an average of £1,277 a year.
British Gas will delay increasing the direct debits paid by customers on the default tariff until February next year, before smoothing out the higher costs over the warmer months, when homes tend to use less energy.
The company said it wanted to give its direct debit customers “the option to create a bit of extra financial breathing space if they need it”.
In total, about 15m households that use standard energy tariffs will face higher energy bills over the winter, after the industry regulator, Ofgem, said the price cap would need to rise to cover the cost of 16-year highs in the UK gas market.
Most of the UK’s largest energy suppliers have announced price rises that match the maximum rate set by Ofgem in the past week. EDF Energy was the first to announce a price rise last week, followed by similar hikes at E.On UK, Scottish Power and Ovo Energy. Bulb Energy told customers it would raise prices from October in a blogpost published on Thursday.
The string of price hikes has reignited calls from campaigners and energy suppliers for a social energy tariff to help the rising number of households facing fuel poverty.
“We understand that the price cap increase comes at a very expensive time of year for some of our customers. The furlough scheme which has helped millions of people is coming to an end, parents are getting children ready for a new school term, and Christmas is on the horizon,” British Gas said.
The direct debit freeze over winter could save million homes an average of £50 as colder weather sets in, and the government’s furlough scheme and universal credit top-ups end. However, the scheme will not help households that pay for their energy by cheque or pre-pay meter, and which are often the most financially vulnerable.
The energy company has 1.2 million pre-payment customers and 1.3 million customers who pay their bills by cheque. A further 2 million British Gas customers have signed up to a fixed-rate deal and will not be affected by the 1 October price increase.
