- Prices guaranteed below Ofgem limit
- British Gas introduces fixed-rate plan
- Early exit incurs significant fees
British Gas has introduced a fixed-rate energy plan that guarantees to exceed the Ofgem price cap at least until July.
The UK’s largest energy supplier has launched its Price Promise tariff, under which the average dual-fuel household will pay £1,699 per year.
This is £229 less than the annual price cap set by Ofgem, which is currently £1,928.
The deal’s selling point is its guarantee to beat the price cap starting in April when Cornwall Insight’s expert analysts predict it will drop to £1,620 per year.
However, this price-beating offer is only valid for the first five months, or one-third, of the 15-month contract term.
After this period, British Gas customers may have to pay more than the price-capped rate, and early termination could incur significant exit fees.
British Gas representative Catherine O’Kelly stated, “We are always looking for ways to help our customers save money, and we want to ensure they benefit from lower energy costs as soon as possible – even if it means they use more energy during the winter.”
‘Furthermore, they can be confident that if the price cap decreases in April and becomes cheaper than this tariff, we will reduce our rates to match it.’
Is the new deal satisfactory?
To find out if the British Gas offer is more cost-effective than your current deal, use the price comparison tool on the energy company’s official website.
With the Price Promise deal, a two-bedroom, two-person household currently spending £131 per month on gas and electricity is estimated to save £102.63 per month, or £28.37 per month.
However, this saving is only applicable until April, when Ofgem will reset its price cap.
British Gas has not disclosed the rate it will charge for the Price Promise tariff beyond April; however, it guarantees to beat any future price caps.
Thus, customers will be charged a rate below the price cap until July, when it will be reset.
British Gas has not committed to its tariff exceeding the Ofgem price cap beyond that point.
Customers who opt for the Price Promise deal today could face rates higher than the Ofgem price cap for up to 10 months, given the 15-month fixed term of the deal.
Terminating the Price Promise contract before the end of its 15-month term will result in significant exit fees.
Inquire about the exit fees
The exit fees for gas and electricity under the Price Promise tariff are £75 each.
This compares high to the past when exit fees often were £30 per fuel, and many contracts included no fees at all.
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Regrettably, a £75 per fuel exit fee is now roughly average, as energy companies have raised these charges.
While switching to another British Gas fixed tariff under the Price Promise incurs no exit fees, the company’s other fixed plans may have higher fees.
British Gas offers The Fixed One 24M v5 energy tariff with £200 exit fees per fuel as an example.
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