British Gas has scrapped its standard variable tariff for new customers and those currently on a fixed deal - but the replacement tariff is only £25 a year cheaper.

Since Saturday all new British Gas customers, and those currently on a fixed deal with the supplier, will be rolled onto a new 'default' fixed-rate deal once their existing tariff with British Gas ends, rather than the traditional standard tariff.

But for the 4.5 million or so customers currently on British Gas's standard variable tariff (SVT), there'll be no changes - though the supplier says it is now contacting these customers monthly to offer alternative deals.

In February Co-op Energy became the first big name to scrap its SVT, and Npower has announced it's trialling an end to its SVT while E.on revealed it's to scrap SVTs for those with a smart meter or on a fixed deal which ends, and Scottish Power has also said it plans to get rid of standard tariffs this year.

To see if you can save by switching, do a full market comparison on our free Cheap Energy Club.

What is a fixed-price tariff?

A fixed-price tariff essentially means the unit price you agree to pay for your energy is set for a certain period such as one or two years, meaning it won't increase for the duration of the fix. However, these tariffs may have exit fees if you decide to switch before it ends.

Conversely, the rates of SVTs can change – but there are no exit fees or fixed end date. SVTs are energy suppliers' default tariffs and are nearly always the most expensive. If you've never switched or your fixed deal is over, it's likely you're on one of these.

How does the new default fixed tariff work?

In October 2017, Ofgem introduced new rules letting suppliers roll customers on to new fixed deals, where previously they had to move all customers at the end of fixed-term deals on to a standard variable tariff.

These new 'default' fixed tariffs must:

  • Not have any exit penalties for switching away early.
  • Be the same price or cheaper than the provider's standard variable tariff the customer would otherwise be rolled onto.
  • Be similar in nature to the customer's current tariff (eg payment method, online or offline account management and meter type).

How does the new British Gas fix stack up?

The British Gas Temporary Apr 2019 tariff costs £1,076/yr on average, compared with £1,101/yr for its standard variable tariff, based on typical use.

Although this is a slightly better deal, and is fixed for around a year, many could save £100s more by switching provider entirely.

If you want to stick with British Gas, you could switch to its cheapest tariff, All Online Apr 19 (only available via price comparison websites), which is currently £932/yr for the typical user – although this tariff does have exit fees. However, to get this deal, you will need to arrange to have smart meters installated if you don't already have them.

There are no exit fees with both British Gas's standard tariff and its replacement fix, so you can ditch and switch penalty-free. Use our free Cheap Energy Club to do a full market comparison to find the best deal for you.

Here's how the prices compare:

How the tariffs compare (i)

Tariff Price/year
Temporary Apr 2019 £1,076
British Gas Standard £1,101
Cheapest on the market (variable) £807
Cheapest fix on the market £810 (ii)
(i) This table is based on Ofgem's typical usage figures. (ii) Not available in Scotland.