- Video report by ITV News Correspondent Joanna Partridge
British Gas is raising the cost of its standard variable tariff (SVT) by 3.8% on October 1, affecting millions of customers, the company has announced.
The increase to the tariff, which was withdrawn for all new customers on March 31, means the average bill for existing dual fuel households will rise by £44 to £1,205.
The increase is the second for British Gas customers this year, after the company announced in April that it was increasing its prices by an average 5.5% from May 29 for both its SVT and its new Temporary Tariff fixed-rate deal, which replaced the standard tariff at the end of March.
British Gas said it was increasing its prices again following a 20% rise in the costs of buying wholesale energy since April.
The company said 3.5 million customers were affected by the latest increase, but added it would be contacting them to consider alternatives to the SVT and expected that figure to drop to three million by the end of the year.
Mark Hodges, chief executive of Centrica Consumer, said: “We have today reluctantly announced plans for an increase in our standard variable tariff (SVT).
“We understand that any price increase adds extra pressure on customers’ household bills.
“However, this reflects the sharp rise in wholesale energy costs.
“In response to rapidly rising wholesale market costs, since April a number of other energy supply companies have increased their SVT prices and Ofgem have also announced a second increase to the prepayment meter cap.
“With more than 70 energy supply businesses now operating in the UK, the energy market is increasingly competitive and we are focused on offering all our customers attractive fixed and bundled deals.”
The increase comes a day after the energy regulator increased its price cap on variable tariffs due to rising wholesale prices.
Ofgem said its safeguard tariff, which protects five million households from overcharging, will rise by £47 per year in October to £1,136.
The watchdog said it was increasing the cap due to rising oil prices, which have fed through to wholesale gas prices.
It follows a series of price hikes from the energy companies over the summer, affecting millions of households.
Consumer groups have warned energy customers about the rising tariffs, saying they should switch to a better deal.
Consumer watchdog Which? has estimated that customers who do not seek out the best deals could end up overpaying by as much as £400 per year.