British Gas announces significant price rises

Households in the UK received a fresh blow to their finances tonight after the country's largest energy supplier announced double-digit price hikes.

Centrica is to increase gas and electricity tariffs by an average 15% with immediate effect – a move impacting an estimated 13 million British Gas customers.

In doing so, the provider became the third big energy supplier this year to raise standard tariff prices, following rivals EDF and npower, as the industry passes on soaring wholesale energy and distribution costs.

The electricity price rises are subject to regional variation, with customers in Manchester facing hikes of 19% and London households nearly 17%. Parts of Scotland will see 12% rises, as will the Midlands.

This is because British Gas is charged varying amounts by power networks to distribute its electricity.

Centrica, which cut its prices twice last year, said it was unable to carry the “burden” of the rising wholesale energy costs, as much as 61% year on year, and that its residential arm would make a loss this year unless the hikes came into force.

But the UK’s second supplier Scottish & Southern Energy, which has 8.5 million customers, said it would hold its bills down until the end of March at least.

BG said 2.4 million customers on fixed-term tariffs lasting up to 2010 would be unaffected by today’s rises, and that it would also delay them for another 340,000 “vulnerable” customers until the end of winter.

Consumer group energywatch said it was “sick and tired” of hearing about the gas and electricity companies’ justifications for price rises.

It is the latest blow for households after a year in which petrol, mortgage interest payments and food prices have all risen sharply.

Energywatch chief executive Allan Asher said: “This increase piles on even more agony for consumers who are facing a salvo of mid-winter double-digit energy price rises.

“Energy price rises are coming in thick and fast and like every other consumer I’m sick and tired of hearing energy companies try to justify the latest bout of pain they are inflicting on their customers.

“It is obvious that this market is not delivering good value to consumers. The reasons are well known and explain why energywatch has been calling on the Government to call in the Competition Commission to put this market under the microscope.”

Gordon Lishman, director general of Age Concern, spoke of his disappointment that the rises were being imposed now.

He said: “We’re really disappointed that, despite their very healthy profits, the big energy firms don’t think they can afford to put off these increases until after the winter quarter.

“This is when the poorest pensioners worry most about their bills. Concern about these price rises may cause older people to cut back on their heating, which could put their health at risk.”

The energy suppliers have faced calls by the industry regulator to be hit with a £9bn (€12bn) windfall tax after the build-up of emission trading permits by the industry.

It came as Ofgem bosses met with Chancellor Alistair Darling to discuss the state of the energy market.

Announcing the price rise today, BG managing director Phil Bentley said: “As the UK’s biggest buyer of gas, we want lower gas prices.

“However, lower availability of supplies from both the UK and the Continent, coupled with higher global oil prices, have forced up wholesale prices.

“We can’t absorb the burden of these higher energy prices and the costs of delivering a cleaner environment.”

BG said wholesale costs had risen 51% for gas and 61% for electricity in the past year.

The cost of transporting and distributing the energy would also rise by 7% this year, the firm said, with the Government’s targets for renewable electricity generation and carbon emissions reduction an “increasing obligation”.