The British Gas parent company said the move will increase engagement and choice, reduce average bills, deliver a fairer allocation of energy policy costs and further protect vulnerable customers.
It has suggested ongoing ‘evergreen’ tariffs, which don’t have an end-date, are a large part of the problem, acting as a disincentive to customer engagement.
The firm plans to instead offer customers at the end of their contracts a choice of at least two fixed term competitive tariffs, encouraging them to make a choice about which energy supplier and product is best for them.
If this fails they will be moved onto a 12-month emergency or default tariff with no exit fees.
Iain Conn, Group Chief Executive at Centrica said: “We have long advocated that the end of the SVT is the best way to encourage customers to shop around for the best energy deal.
“This will be fairer for everyone and especially those who struggle most with their bills.”
Energy supplier E.ON has also announced plans to phase out the controversial tariffs.