Thursday, 24 November 2011

British Gas transparent tariffs must be more than a marketing tactic

Today’s announcement by British Gas that it is to introduce simple and transparent pricing structures, involving one fixed and one variable rate, whilst welcome, will be viewed with cynicism by many consumers, media commentators and the company’s competitors.

Let’s make no mistake about it, this has been done under duress. The energy sector is under pressure. The Big Chiefs have already been called into 10 Downing Street for a dressing down by the PM (although not much constructive came out of it), OFGEM is investigating the wholesale markets and the media is getting increasingly cynical about a lack of competition and seemingly orchestrated movements in pricing. Today, on the BBC, British Gas’ Chief Executive admitted that the sector had lost the trust of consumers, with more than 500 different tariffs available.

But are BG’s motives entirely altruistic? Perhaps, but the energy market in the UK is mature and BG has been losing market share. Many customers will unquestionably be attracted to the transparent British Gas model and I have no doubt that the company will gain customers (however many thousands will still be out there on the old tariffs).

The true measure will surely be whether customers actually save any money. Many years ago I was told by one energy employee that most of the top jobs in the British energy sector were held by ex-British Gas employees who liked nothing more than to get one over on their old mates.

If today’s announcement ultimately turns out to be a tactical grab for market share, dressed up as corporate altruism, with no real customer benefit, then trust in the whole sector, not just British Gas will erode even further.

One to watch!


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