Anger as British Gas raises bills
British Gas was braced for another customer backlash today after hiking household energy bills by 14.2%.
Soaring oil prices and dwindling North Sea gas reserves were blamed by parent firm Centrica for the third increase in bills since January last year.
The price will add £96 to the average annual bill across its base of 16 million customers, but Centrica said there little difference between its prices and rivals such as Powergen and EDF Energy who have put up charges in recent weeks.
Centrica revealed earlier this year that more than 1.1 million customers deserted British Gas last year since bills were raised by 5.9% in January and by 12.4% eight months later. A further 445,000 left in the first six months of this year.
Unions denounced today’s move as “shameful”, while consumer watchdog energywatch said it would drive many customers deeper into debt.
Allan Asher, chief executive of energywatch, said: “The wage rise for the average person comes nowhere near the latest increase.”
Centrica said higher bills would not fully cover the rising cost of wholesale gas and electricity, which is 50% and 61% higher than a year ago respectively.
It also warned that British Gas profits would be significantly reduced in the second half of its financial year as it faces up to volatility in the wholesale energy markets.
A Centrica spokesman said there would be no further increases this year after today’s move, which lifts the annual gas bill of a family with a typical three-bedroom semi-detached house from £405 (€600) to £462 (€684) and their electricity bill from £268 (€396) to £307 (€454).
The price hike affects 16.2 million customers whose energy is supplied by British Gas, although an extra million are protected by their decision to sign up to its price protection plan.
That allows customers to cap the price they pay for gas and electricity until 2007 and British Gas said today that it was offering households who pay for “dual fuel” the chance to fix their energy prices until 2010 at no extra cost.
British Gas is also taking action to protect the poor and elderly who are struggling with their bills by offering a rebate of up to £60 (€88) to 250,000 of its customers.
Mark Clare, managing director of British Gas, said: “We are no longer an energy island – spiralling world oil prices are now having an unprecedented impact on the cost of gas as the UK is now dependent on imports.”
At the end of last year, British Gas controlled 53% of the residential gas market and met 23% of demand for electricity.
Energywatch said suppliers were paying over the odds for energy – but were passing the full burden on to consumers.
Mr Asher pinned the blame for the latest price rises on the wholesale energy market, which he said was failing the UK consumer.
“What we face is not just an ineffective energy market but one that, for the consumer, is broken. British Gas have repeated the explanation for price rises as lying at the door of the European gas market,” he said.
“Sadly, there are no short-term fixes for the European wholesale gas market. What we need is a meaningful reform agenda from the market which gets to the root cause of why UK consumers pay grossly-inflated prices for energy.”
European gas markets are indexed to the oil price, while the UK is no longer shielded from the effects by meeting all its domestic needs from the North Sea.
Brian Strutton, national officer of the GMB, said: “The hard reality for the poor and elderly is that they will need more help from the Government this winter with fuel bills and GMB is looking to ministers to set minds at rest.”
