Why are British Gas Really More Expensive?
24th February 2017
“the playing field is tilted against us at the moment”
- Iain Conn (CEO, Centrica)
It's a common complaint from the big suppliers:
They are disadvantaged by the social obligations they carry that don't apply to smaller suppliers.
They carry the burden of these costs, and they have no option but to pass on to their customers in the form of bigger energy bills.
Let's take a closer look.
For Octopus, our standard variable tariff is currently about £121 cheaper than British Gas. That's £923 vs £1044 for a medium user.
Is this difference down to obligations?
Of course it's not.
We've done the maths, and it's built into our business model.
The obligations for us would be about £40 per customer. So even if we were obligated, and passed all of that on to our customers, we'd still be £81 cheaper than British Gas.
And let's face it. Energy prices are changing.
A "price freeze until August" is simply a way of announcing a price rise in September.
If British Gas announce a similar rise to what we've seen from the other Big 6 suppliers, they'll be at something like £1120 per year - about £200 more than Octopus, and £160 more than Octopus would be if we were obligated.
The simple truth is that British Gas are more expensive because they are not as efficient, and make higher profits.
As one Big 6 consultant put it to us:
"If you have a massive customer base, and find you can keep putting your prices up? Well, you would, wouldn't you?"
Now, it would stand to reason that with a more expensive product, the service a customer could expect would be better.
And once again, this is just not the case.
It's the smaller suppliers that are delivering better service - just check Trustpilot where we, and other new suppliers, are rated over 9/10 by real customers, whilst the Big 6 languish at 5/10 and lower (all the way down to 0.2/10!)
And we're more sustainable too. Leading the way in solar energy, as well as clean energy produced from vegetable matter.
So if Iain really wants to understand why we're cheaper – and what real customer service looks like – we're inviting him to visit us, to talk to our team, and see what best practice in energy looks like in 2017.
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