British Gas raises gas and electricity prices

 

British Gas has announced increases to the gas and electricity prices it charges customers.

It has raised its charges for both types of fuel by about 6%, adding £80 a year to the average dual fuel bill.
Britain's biggest energy supplier said the "unwelcome" increase would come into effect on 16 November.
Its rival SSE, which trades as Scottish Hydro, Swalec and Southern Electric, has already said it will raise its prices by an average of 9% from Monday.

"We know that household budgets are under pressure and this £1.50 per week rise will be unwelcome," said managing director Phil Bentley.

"However, we simply cannot ignore the rising costs that are largely outside our control, but which make up most of the bill."

British Gas also warned that the rising cost of government energy policies was likely to add even more to household bills next year.

Speaking to the BBC, Richard Lloyd of consumer group Which? criticised the opacity and lack of competition in the energy market.

"What we need to see is action from the government and more pressure on... these very big lazy companies who think it's OK to clobber people with above-inflation price rises at the very time when they can least afford it," he said.

"Everybody knows that this is a market that is not competitive, not properly working for consumers.There is very little pressure on british gas to be efficient and to keep these price rises to a minimum."

Over six million households in England already plan to cut back on their heating this winter because they are worried about affording their bills, according to Audrey Gallagher of the government-sponsored watchdog Consumer Focus.
"Today's price rise will leave customers even more worried about the cost of heating their homes," she said.
British Gas last raised its tariffs in August 2011, when gas prices went up by 18% and electricity prices by 16%.

Analysis

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The supply of gas and electricity to UK households is dominated by just six big firms.
Two have now announced imminent price rises.
Three of the others will probably do the same as well, soon.

That is because they like to move as a herd and because they are subject to the same pressures on their costs.

The one exception is E.On, which promised in May not to raise prices again until 2013.
But that is now less than three months away.
There have been occasional price cuts in the past few years.

But take heed of what the regulator thinks: the only direction for energy prices in the coming years is up.

Then in January 2012, it cut its electricity prices by 5%.

The British Gas boss claimed that 85% of the price it charges customers is outside its control, including wholesale gas prices and the cost of government policies to try to reduce emissions and help the poorest households.

"Britain's North Sea gas supplies are running out and British Gas has to pay the going rate for gas in a competitive global marketplace," said Mr Bentley.

"Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers' homes, and the costs of the government's policies for a clean, energy-efficient Britain, are all going up."

The cost of government policies and the national grid upgrade added £50 to the average household bill this year, and is expected to add another £60 next year, British Gas said.
It said that winter wholesale prices it pays were proving to be some 13% higher this year.