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British Gas increase to see bills rise £1,300
15^th May 2008
Families have been warned to prepare for yearly fuel bills of more than £1,300.

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British Gas increase to see bills rise £1,300

15^th May 2008
Families have been warned to prepare for yearly fuel bills of more than £1,300.

Consumer groups raised the prospect of a "worst-case scenario" where prices rise by almost 50 per cent this year.
Centrica, the owner of British Gas, told shareholders that it would have to increase prices to maintain profits.

In January, British Gas increased bills by 15 per cent for its 16 million customers. Centrica said the rise was the only way to avoid losses. The increase took the firm´s average annual dual fuel bill to £1,055 – a rise of £143. Direct debit customers saw bills go up by an average of £131 to £968.

Since that increase, around 100,000 have left British Gas. But yesterday, Centrica said that it would once again have to pass on rising wholesale gas prices to customers in order to avoid making losses at British Gas. According to Heren Energy, a consultancy, wholesale gas prices have risen from 75p per therm last winter to 85p for delivery in winter this year. "We will take the necessary action to deliver reasonable margins in the retail business," Centrica told shareholders.

British Gas later declined to say if and when its prices would rise, with a spokesman insisting that the decision will depend on "volatile" wholesale energy markets. But energy analysts at Citigroup, an investment bank, said they now expect Centrica to raise its British retail prices by as much as 18 per cent later this year.

And uSwitch.com, which monitors energy bills, painted an even bleaker picture. Wholesale gas and oil prices have continued to rise since the earlier price increases this year, and uSwitch said that as those pressures continue to mount, household energy bills could hit £1,327 before the end of this year.

That would amount to a 46 per cent increase this year alone. The service said that even if households are "lucky" they will see a 10 per cent rise by late summer with a further 15 per cent jump in January 2009. That would add almost £280 to the average household energy bill.

Tim Wolfenden, head of home services at uSwitch.com, said that the prospect of more rises made fixed-price energy deals more attractive to households. He said: "If Centrica – the parent of British Gas, Britain´s biggest supplier – is feeling such acute pressure over pricing then it´s safe to say that others are feeling it too."Suppliers have been holding firm, but the cracks are beginning to show.

"It´s pretty clear that something has to give and that household energy prices are going to be shooting up again this year."

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