Financial News

  • 21 February 2014, 10:53

British Gas Plots Fightback After Exodus

The UK's biggest domestic energy supplier is drawing up plans for a price-led assault on its rivals in a bid to win back customers amid the ongoing political row over costs.

Sky News understands that British Gas is expected within the next fortnight to unveil a portfolio of 'bundled' product packages allowing customers to take a range of other services alongside their gas and electricity at a discounted overall price.

The company is also expected to begin offering a package including Hive, its new remote controlled heating and hot water product, but which waives or reduces some of the fees usually charged for the service.

British Gas's push to compete more aggressively with other members of the 'Big Six' as well as new entrants to the residential energy market will come just months after it announced plans to raise fuel prices by just over 9%.

The new initiative will not amount to a price cut but is designed to signal the company's determination to regain the lost market share.

Centrica, the owner of British Gas, is expected to confirm on Thursday that approximately 370,000 customer accounts defected to rivals during the final quarter of its financial year.

The group is forecast to have made roughly 2.7bn of operating profit last year, which it is expected to say gives it the scale to secure long-term gas supplies for the UK.

Centrica has been the target of criticism from all three main political parties in recent months, despite the fact that it was among the first of the major suppliers to pass on reductions triggered by changes to Government levies.

Speaking on the day that British Gas announced price increases last autumn, David Cameron said that it was "a very disappointing announcement", adding:

"I would encourage customers who are not happy with the service they're getting, are not happy with the prices, to go to the switching sites online and see whether they can get a better deal."

Ed Miliband, the Labour leader, has pledged a 20-month price freeze if he wins next year's general election.

Ed Davey, the Energy Secretary, provoked further controversy last week when it emerged that he had written to regulators to encourage them to assess whether major providers such as British Gas should be broken up.

Centrica is expected to publish new data on Thursday aimed at supporting its argument that its profit margins on domestic energy supply are not excessive.

British Gas declined to comment on its plans, citing commercial sensitivity.

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