British Gas - The true cost of being moved from Essentials tariff to Warm Home Disc

Simon7685

Apologies that this is a long thread but I have tried to cover this subject thoroughly to give an accurate picture.:)

I have posted several times over the last months warning of the real term price increase due to the end of British Gas Essentials Tariff & the switch to the Warm Home Discount scheme that replaces it for those who qualify.

A number of people have poured scorn over this and even accused me of scaremongering. So I have for the last few weeks been calculating exactly what this change will cost me and other people in a similar position.

I have built a spreadsheet that calculates my costs and tested it against my energy bills for the last 3 years, it is accurate to within 11 pence. The difference is due to the way British Gas round up their figures but at the end of it 11 pence is nothing to be fair.

I live in a 2 bedroomed flat and our heating is storage heaters, we have no gas, so everything is powered by electric, we have Economy 7.

I live in Yorkshire and for the last 3 years since moving to British Gas have been on their Social Tariff - Essentials.

The prices I currently pay for each unit of electric are;

Tier 1 = 0.26415p Tier 2 = 0.12354p Night = 0.03454p

Tier 1 is charged for the first 720 units per year
Tier 2 is charged for the remaining units
Night is charged for all units used during the Economy 7 period of 7 hours a night.

Over the course of the last 12 months I have used 13556 units of electric. Split as follows;

Tier 1 = 720 @ 0.26415p = £190.19
Tier 2 = 3355 @ 0.12354 = £414.48
Night = 9481 @ 0.03454 = £327.47

Total cost = £932.14 this figure includes VAT @ 5%
Monthly cost = £77.68

Now the truth...........

My Essentials tariff ends on 28 September 2012, I qualify for the replacement Warm Home Discount Scheme, which means I will receive a £130 payment against my electricity bill around March 2013.

British Gas have advised me they will move me to their Standard Tariff and have advised unit costs as follows;

Tier 1 = 0.29445 Tier 2 = 0.16174 Night = 0.05776

So assuming the same level of usage, which has been the case for the last 3 years give or take a little bit. The cost of the next 12 months will be;

Tier 1 = 720 @ 0.29445p = £212.00
Tier 2 = 3355 @ 0.16174p = £542.64
Night = 9481 @ 0.05776 = £547.62

Sub Total = £1302.26
less
Direct Debit Discount of £40 per year
Warm Home Discount of £130
Total to pay = £1132.26 (includes VAT @ 5%)
Monthly Cost = £94.36

So a real term increase of £16.68 a month against the Essentials tariff!
Or for those that do not qualify for the Warm Home Discount a real term increase of £27.71.

With this in mind I have looked at the other tariffs that BG are currently offering and have worked out the costings for each of them. The details are as follows after a DD discount of £40 & Warm Home Discount of £130;

Clear & Simple Tariff = £1085.21 or £90.43 a month.

Discount Variable August 2013 = £1080.05 or £90.00 a month.

Fixed Price May 2014 = £1195.67 or £99.64

Online Variable August 2013 = £1009.74 or £84.15

So to summarise;

No matter how you look at it the introduction of the Warm Home Discount Scheme has meant a real term increase in energy costs for everyone that was previously on a Social Tariff with their energy provider. This applies to ALL companies as British Gas Essentials tariff was the cheapest of the social tariffs that were available.

Of course I can't speak for Gas costs as I don't have gas but it is probably safe to suggest that the same pattern will emerge.

The introduction of the Warm Home Discount scheme was supposed to signal cheaper energy costs for the most vulnerable in society, in reality it means we pay more. There are currently hundreds of thousands of people who still do not qualify for the WHD yet they too have had their social tariffs ended and as a result are paying substantially more for their energy costs.

Also this costing exercise does not take into acccount the 9% increase announced last week by SSE, a rise that no doubt will be coming for the rest of us as the big 6 companies usually follow each other.

For British Gas customers the cheapest option is to move to the Online Variable 2013 tariff, or gamble on the Fixed Price 2014 which is currently £15.49 a month more. If BG do implement a 9% rise, which is 9% on the unit prices not the overall price, the Online Variable 2013 will increase to £92.99 which makes the fixed price 2014 start to look a lot more attractive, bearing in mind it is fixed until May 2014.

Of course it is a gamble but the one thing for sure is energy costs are only going to go one way and that is up.

Whatever you do, please remember that unless you stipulate which tariff you want, you will automatically be moved to the standard tariff of your supplier once your social tariff ends. This will cost you a lot more. You must also check to see if there is a penalty for moving from one tariff to another.

For example the Online Variable Aug 2013 ties you in to that until Aug 2013, if you want to move to another tariff earlier a penalty charge of £30 per fuel applies. Not all tariffs have this appled to them but you do need to check.

I hope that what I have done here is help to some of you faced with the ending of your social tariff. Of course their are people out there that weren't on any social tariff before and now get the WHD, so they are better off but for those on social tariffs this is not the case and I believe this exercise proves the point.

Simon7685

OOPS!

I have just spotted I put the wrong figures in for the Fixed Tariff May 2014. I am just going in to edit it now. Sorry guys:o

Simon7685

Ammended and correct figures put in for Fixed Price Tariff.

Also please note that my figures and costings are based on my annual consumption, yours may be more or less. Although the principle remains the same you will still be paying more than you were.

kk21

I looked into this scheme for my 84 year old mother. She is with Scottish Hydro which is part of Scottish and Southern Electric. Initially when I phoned them last October I thought that the £120 payment was in addition to the social tariff she was on. Big mistake. I was told that she could not apply as she was on their Energy Care Plus tariff, but they were ending these tariffs and she would then be able to apply.
I was astonished to find that her off-peak tariff would increase by 47% and the peak tariff by 60% along with an increase in the daily charge. This means an extra £700 a year.
This is outrageous. I have the feeling that because a lot of the people benefiting from the social tariffs were/ are in vulnerable groups this is not being highlighted.

Simon7685

My thoughts exactly. The other problem is an awful lot of people do not completely understand how to work out their bills or usage. Lets face it all the energy companies make it as difficult as they can. So all they see is their energy supplier giving them a £130 credit at the end of the winter quarter and think they are getting a good deal.

Another thing the energy companies are very good at, B Gas have done this to me. They write to you to tell you as a customer of their social tariff that this tariff is ending on such a date. At this time you do not need to do anything as they will just move you accross to their standard tariff. Now this would be fine but the standard tariff with BG ends up costing you £300+ more each year. As they are dealing with people already in fuel poverty, why are they not duty bound to advise you of the cheapest not tied tariff and move you to that?

Again people think Oh well thats ok because I can apply for the WHD and get my £130 because they don't think to do the maths they end up paying substantially more in the long run.

I truly believe that the longer this WHD goes on and as more of the social tariffs come to an end, there are going to be hundreds of thousands of people ending up in a financial mess as a result.

savemoney

I got the letter from them last week think I will be on standard tariff end of September, of course I will be switching nearly the time. We sent form off for the £130 rebate we get both gas/electric

Simon7685

Having spent the last week looking round all the main suppliers, I am going to seriously think about switching to Scottish Power and their fixed Jan 2014 tariff.

It will work out cheaper with no penalty for leaving it early and fixed for this winter and half of next. Before I jump though I am going to ring S Pwr and confirm with them that they will give me the WHD with them. I qualify under the broader group eligability, BG have qualified me but not sure they will, so best to check.

Veryskint

Just trying to work out how I am going to break the news to my mother that her energy costs are going up from £660 a year to £1450 a year... I keep thinking I have done the maths wrong but this seems to be the result of her coming off the essentials scheme.

Cant believe this isnt all over the news. This is going to affect a lot of the most vulnerable people, and I am sure they will be like my mum, unable to suddenly come up with the extra cash.

Simon7685

I couldn't agree with you more, there are going to be thousands of people facing massive energy cost rises due to the ending of the social tariffs. The WHD scheme does not cover anywhere near the true cost.

After a lot of deliberation on my own position I have opted for a switch to Scottish Power. I was going to go for the Jan 14 no penalty tariff but when I worked out our usage over the last 3 winters I decided instead to fix futher ahead. So I have gone for the fixed to November 2014 tariff, even though there is a penalty of £30 if you leave early.

I had to go for this one really to fix for 2 full winters as the other one would have left me with a tariff ending in December. My peak usage time is November to April, this year the heating was on right through to May! I could not afford to take a chance.

The upshot of all this is as follows;

On British Gas Essentials, annual usage is 13556kw/h with 70% on Economy 7. This cost me £76 a month over a 12 month payment plan.

Moving to Scottish Power and a fixed tariff is £98 a month over the 12 month plan. An increase of almost 29% per month. This however is much better than the £110 a month that BG were offering me with no protection against price increases.

If I get accepted for the WHD on Scot Power (which they said I will) that will give me a £130 credit to offset against the £264 a year rise. A rise of over 28% against what I have been paying for the same energy.

hannahO_2

Having read Simon7685's post I decided to have a look at Scottish Power Energy but their subsidary company (Southern Electric - FREEphone CS too) is looking more cheaper (£10 savings per quarter for gas alone, compared to BG online variable Nov 2013) so I think I'm gonna change to Clear & Simple on BG while I am being moved to SE. SE is offering a 2yrs capped tariff and if price goes down, you will benefit but it won't go up for 2 years as the price is capped.

There are other cheaper options but I don't want to give my money to npower or EDF.

savemoney

Just moved from Essentials yesterday as it ends this month for me. My energy costs from September 2011 to September 2012 were for both utils £1143. Now switched to Online Variable November 2013 with my usage for that period and based on that my costs are £ 1168, £25 increase still waiting to here if we will get the £130 in March as they have a back log so BG tell me


Gas Sept 2011 to Sept 2012 13991kWh £622
Electric Sept 2011 to Sept 2012 4707kWh £521