Centrica (LON:CNA) will scrap its standard variable tariffs for new customers and offer existing customers better deals, the British Gas owner has said. The move comes as the blue-chip company prepares to update investors on its third-quarter performance on Thursday.
Centrica’s share price has been little changed on the news, having inched 0.07 percent higher to 163.32p as of 09:18 GMT, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.28 percent lower at 7,360.34 points. The group’s shares have lost more than 18 percent of their value over the past year, and are down by some 30 percent in the year-to-date.
End of standard variable tariff
Centrica said in a statement today that it was announcing a string of proposed measures “to reform the UK energy market and benefit customers,” including unilaterally withdrawing its standard variable tariff for new customers, and pledging to “proactively offer customers a choice of fixed term tariffs at the end of their contract”. The British Gas owner will further introduce a 12-month emergency or default tariff with no exit fees, and will engage customers on legacy standard variable tariffs and offer them better deals.
“We fully recognise that the energy market can and should be improved, but further price controls will only set this back,” Centrica’s chief executive Iain Conn commented in the statement, adding that “the end of the standard variable tariff is the best way to encourage customers to shop around”.
The move comes after the British Gas owner recently unveiled plans to expand its Connected Home business in Italy.
Analysts weigh in on industry consolidation
In a separate development, City A.M. quoted analysts at Macquarie as commenting that news that SSE (LON:SSE) is in talks with Germany’s Npower over plans to merge their gas and electricity businesses in Britain was neutral for the British Gas owner.
“Indeed we see scope for a further Big 6/Big 6 merger (E.On/Scottish Power), which could follow a similar route as SSE/Npower. We do see EDF at least exploring this possibility of consolidation, but we see it unlikely that Centrica will be able to undertake a similar exercise,” they pointed out.