Is British Gas really cheapest?

By ED MONK FOR THISISMONEY.CO.UK
Updated: 07:25 EST, 26 April 2007

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British Gas customers wake up today to the news that gas and electricity bills have been cut again – but are they right to assume they are getting the best deal?

The latest British Gas cuts mean the former state-owned supplier can boast that it has shaved 20% off gas prices and 17% off electricity this year - reducing an average customer's bill by £207.

In a carefully worded statement, British Gas chief executive Phil Bentley said: 'We want British Gas to offer the best value around. We've taken the lead on lower prices and we are committed to restoring our customer service to an industry-leading level.' He goes on to say that 'as well as being cheaper than our competitors, we are also greener' and a British Gas statement boasts that 'British Gas' standard dual-fuel tariff is now cheaper than the local supplier in every area of the country'.

It would be easy for British Gas customers to believe they were getting the best deal around but the reality is not that simple.

It seems the first casualty of this energy price war has been a true comparison of prices. British Gas customers on standard tariffs might be surprised to learn their new, reduced, prices are actually only the third-cheapest around, still behind Npower, in second, and Scottish & Southern Energy, the cheapest of all.

That's according to price comparison business Uswitch. Tim Wolfenden, product strategy manager for Uswitch, said: 'British Gas customers will benefit from a drop in their bills but the majority probably won't be on the cheapest tariff available. By our calculations the cut puts British Gas joint-third cheapest for standard prices. But even that comparison won't hold for everyone.'

Mr Wolfenden said energy suppliers have become more sophisticated in how they apply price cuts. Different regions of the country will get different reductions as suppliers target the areas where they are less competitive versus their rivals. This makes it difficult to identify one supplier as cheaper than another. Finding the cheapest deal will depend on where you live and who supplies your energy already.

Karen Darby, founder of comparison business SimplySwitch, said the latest cuts would allow British Gas to boast they were cheaper than 'host' suppliers – the companies that enjoyed a monopoly in a particular region before energy deregulation – in all areas and would help ease the criticism British Gas has received over poor customer service.

She said: 'These cuts are not huge, but this is a welcome, if tactical step. Last week British Gas was criticised for its customer service record, so the energy company acted in the swiftest way it could - by cutting prices.'

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British Gas is on safer ground for online tariffs. These are the cheaper rates available only by applying on the internet.

The British Gas Click Energy 2 tariff is the cheapest option for the vast majority of people, wherever they live. But British Gas customers on standard tariffs will get these prices only if they switch to Click Energy, just as customers of other suppliers have to.

It is important for people thinking of switching to the best British Gas deal that they take this online route. Switching over the telephone or signing up with a face-to-face representative will not get you the best prices.

Using a price comparison tool like the one here at This is Money is the only way to make sure you are getting the best price possible.

You should also consider the service you get from your energy supplier. According to the independent energy watchdog Energywatch, British Gas was the worst performing supplier on customer service even before it became swamped with complaints because of problems with a new billing system. Would paying marginally less for energy be worth the hassle of inaccurate bills, rude staff or unpaid rebates?