July 08, 2011
Millions of British Gas customers are to face higher utility bills after the company said it is putting up the price of both gas and electricity.
Gas prices will rise by an average of 18% and electricity bills by an average of 16%.
The increases, which will come into effect from August 18, will see the average dual fuel energy bill rise by £190 a year.
The announcement was made at 10am today - as Prime Minister David Cameron was in the middle of announcing plans to deal with the News of the World phone-hacking scandal.
British Gas said it had raised its prices in response to a 30% hike in wholesale prices since last winter.
It is the second of the "big six" companies to put up prices after Scottish Power announced a 19% hike in gas prices and 10% hike in electricity last month. Other companies are expected to follow.
The change in prices will directly affect nine million customers while a further million have fixed prices and will not be immediately impacted.
British Gas last hiked its prices in December when household bills increased by an average of 7%, adding £1.50 to the average weekly dual fuel bill.
Managing director Phil Bentley, said: "We know there is never a good time to raise prices but we are buying in a global energy market and have to pay the market rate.
"Rising wholesale costs is an issue facing all energy suppliers. Our advice to customers is to wait and see what happens in the energy retail market before making any decisions about switching supplier."
The company said it "cannot continue to make a loss on the energy it sells" and it needs to make a profit to invest in future energy sources.
It offered numerous ways for its customers to keep their prices down, including fixing their bills or improving insulation in their homes and energy monitors.
British Gas said some bills could increase by as much as 24% depending on how customers pay their bills and where they live. The minimum increase will be 12%.
Mike O'Connor, chief executive of Consumer Focus, said wholesale prices have gone up but are still a third lower than their peak in 2008.
He has calculated that in this time British Gas prices have risen by around 44% on gas and 21% on electricity and "suppliers have made healthy profits".
He added: "This price rise will send a shockwave across the country. The impact on customers will be severe, piling more pressure on severely stretched household budgets and pushing hundreds of thousands more households into fuel poverty.
"Consumers simply don't trust that energy companies have customers' interests at heart and rightly question whether prices are fair."
The latest price rises will cause more misery for cash-strapped households, which are struggling as wages fail to keep pace with rising inflation. All of the big six companies hiked prices over the winter.
The Bank of England earlier this year said it expected bills to rise by 15% as part of its forecasts that inflation will hit 5% this year.
But the two companies to have brought in hikes so far have increased prices at a greater rate than the Bank forecast, raising the possibility that inflation will climb even higher.
Richard Lloyd, executive director of consumer campaigner Which?, said: "Many people are already having to cut back on essentials because of the rising cost of living, and with energy bills rising further, this could be a cold winter for many."
NWN: Looks like the poor British public are to get screwed even more. Rises like this will result in deaths this coming Winter, especially if they are like the last two vicious winters we have had. Maybe it's time to re-nationalise the utility companies ?