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British Gas to freeze energy prices for winter months

Published 01/12/2016

British Gas will keep its gas and electricity standard variable tariffs on hold until at least March
British Gas will keep its gas and electricity standard variable tariffs on hold until at least March

British Gas has become the second Big Six provider to freeze energy prices over winter, but experts warned over tariff hikes of up to 10% next year.

Centrica-owned British Gas said it would keep its standard variable tariffs on hold until at least March 2017, offering "peace of mind" for more than six million customers.

The move follows SSE's winter price freeze last month.

While it has come as welcome relief at the start of winter, consumer groups said surging costs in wholesale energy markets will mean a round of price rise announcements are just around the corner.

It will heap further misery on households in 2017 as they face an inflation shock next year from the Brexit-hit pound.

Martin Lewis, founder of MoneySavingExpert.com, said: "The huge increase in wholesale prices and the weakness of the pound means we're seeing massive inflation in the energy market.

"So this is almost certainly just a delay of price rises. Come the end of winter, expect to see hikes of up to 10% by many of the big six companies."

Most of the major players are likely to hold off from raising prices, as they have already bought gas and electricity for delivery in the coming months at lower prices.

But smaller suppliers such as Ovo and Co-operative Energy have had to increase tariffs, while rising wholesale costs led to the collapse of GB Energy on Saturday.

GB Energy had recently hiked tariffs by as much as a third, but struggled to cover its cheap fixed rate deals taken out by customers.

Its 160,000 customers have since been taken on by Co-operative Energy, which is honouring existing deals and credit balances.

Stephen Murray, energy expert at MoneySuperMarket, said price rises were "fairly inevitable", adding he expects announcements to come in February and March, to take effect at the start of spring.

He said g as prices in particular are linked to the cost of crude oil which is bought in US dollars, making it more expensive for UK energy firms.

It comes amid warnings for shoppers to brace for new year price rises on the high street as the pound sends costs rocketing for many retailers.

The SSE and British Gas price freezes also follow mounting pressure on energy firms to treat loyal customers fairly.

Business Secretary Greg Clark recently met energy companies over concerns they are abusing customer loyalty following a report commissioned by industry lobby group Energy UK.

The report accused Britain's Big Six suppliers of overcharging families and making six times the profit they admit to publicly.

Citizens Advice pointed out that households on standard variable tariffs are paying as much as £380 more than those on cheaper fixed deals.

Gillian Guy, chief executive of Citizens Advice, said: "Price freezes by suppliers are welcome but it's also important that the Government looks at a more permanent way to bring down costs for people on the standard tariff.

"One way to do this would be automatically switch low-income customers who have been on the standard tariff for years to a cheaper deal."

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