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Economy

British Gas feeling the heat

Written by Gary Howes

Monday, 04 August 2008

Consumers ditch British gas in wake of price hike.

One of the UK's largest loyalty networks has reported seeing more people switching utility providers in the past two days than they did in the previous three months.

Froggybank.co.uk says that since British Gas announced it would hike prices by 35% last Wednesday utilities have become the top selling category in the network - for the first time ever.

The of announcement of profits of just under £1b and the resulting media storm will not do British Gas any favours when it comes to retaining customer loyalty.

Competing utility companies have jumped at the chance to gain more customers with Scottish Power increasing its cashback deal to customers by up to £72.

NPower has included up to £100 cashback from NPower Business, plus cash from comparison sites Switch with Which and Energy Helpline.

Brutal response

Marketing manager at Froggybank, Nadeem Azam says, "we've never seen a rush of business like this, and certainly not for utilities. The response to the announcement has been swift and brutal."

"This is the largest number of people switching utility providers in just two days since we started the froggybank network four years ago. We expect the switching to continue for some time," says Azam.

Fightback

British Gas immediately launched an advertising campaign on the back of its price hikes offering customers the opportunity to fix their prices until 2011.

The company says this is possible due them having secured long term energy supplies at fixed prices.

Inflation fears

Some commentators have focused on how the British Gas announcement will add to inflation fears at the Bank of England who are set to meet this week to review interest rates.

There is speculation that the rising cost of living that the gas increases will invariably bring will offer the Monetary Policy Committee(MPC) the perfect excuse to make a strong decision and raise rates.