Npower price attack on British Gas risks backlash

Energy provider npower is launching a campaign attacking British Gas for hiking its prices, only days before it increases its own prices by 40%.

The RWE-owned utility company wants to turn the heat up on British Gas with the roll-out of a campaign which starts next week to coincide with British Gas raising the prices on its Click Energy online tariff, but analysts say the move could backfire.

British Gas announced the price increases last month, saying the changes to its cheapest tariff will take effect from January 8. It will mean the Centrica-owned utility provider British Gas will have the most expensive online and offline gas tariff in the UK.

However, npower plans to hike the rates on its Gas Guardian product, specifically launched to lure disgruntled British Gas customers to npower (MW September 15, 2005). The rise, according to analysts, is planned for later this month and will see prices increase by about 40%, although not all consumers on the tariff will be affected.

Npower, which positions itself as a “challenger” brand to British Gas, is keen to capitalise on the negative publicity surrounding its rival in recent weeks. In December, British Gas announced plans to drop prices in 2007 to stem customer churn: it has lost over 1 million customers this year and its market share has dipped below 50% for the first time.

However, one analyst suggests energy companies should be cautious in their marketing. He says: “Utility companies need to be careful when running campaigns that highlight rivals’ shortcomings, as people – including journalists – will highlight theirs.”