Blow to householders as British Gas hikes energy prices - again

08:06am 27th July 2006

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Millions of households were reeling from another rise in energy bills today after British Gas said it would hike prices by as much as 12.4 per cent.

British Gas owner Centrica said its 10.7million gas customers will be hit by a 12.4 per cent increase on September 4 while its 5.8million electricity customers face a rise of 9.4 per cent.

The company blamed the soaring cost of the wholesale gas it buys to supply its customers which saw British Gas make record losses of £143million in the first half of "its most difficult year".

The losses at British Gas cut Centrica's overall pre-tax profits from £894million to £569million in the six months to June 30.

Centrica said the cost of wholesale gas had soared 71 per cent in the last 12 months, leaving it "no alternative but to increase prices" for its British Gas customers.

Wholesale gas on the market for this winter is now 266 per cent more expensive than it was for the winter of 2002 to 2003.

Centrica chairman Roger Carr said: "Gas prices for the fourth quarter of this year have stayed extremely high and, faced with substantial losses in British Gas Residential Energy, we have had to take the difficult decision to raise retail prices again."

Fourth increase in less than two years

It is the fourth inflation-busting increase by British Gas in less than two years and follows a 22 per cent hike in gas and electricity bills by the firm in March.

Earlier this week, rival EDF Energy said it will charge its customers 19 per cent more for gas and up to 9.1 per cent more for electricity from next Tuesday.

Scottish Power imposed similar price rises just over two weeks ago.

The recent hikes represent the latest in three years of misery for households across the UK, which have seen the average gas bill leap almost 80 per cent and the average electricity bill rise more than 50 per cent.

Suppliers have blamed the increases on the soaring cost of wholesale gas in the UK, which has been driven up by growing reliance on imports and the lack of openness in markets on the Continent.

Last month, outgoing Centrica boss Sir Roy Gardner branded the European energy market "dysfunctional" and called for reform.

The UK became a net importer of gas at the end of 2004 and now relies on 15 per cent of its supplies from overseas. That is expected to rise to 50 per cent by 2010 and 85 per cent by 2020.

British Gas had hoped its 22 per cent increase in March would have been the last of the year but said it was forced into today's announcement by a 30 per cent hike in the cost of wholesale gas since then.

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