British Gas to raise prices by 9.2%

The price rise is "unwelcome news" admits Ian Peters from British Gas - but he says profits are not increasing

British Gas is to increase prices for domestic customers, with a dual-fuel bill going up by 9.2% from 23 November.

The increase, which will affect nearly eight million households in the UK, includes an 8.4% rise in gas prices and a 10.4% increase in electricity prices.

The company said it "understands the frustration" of prices rising faster than incomes. The average annual household bill will go up by £123.

PM David Cameron has urged consumers to switch suppliers for the best deal.

Energy Minister Ed Davey has described the latest price rise as "extremely disappointing news" for customers.

Rival SSE has already announced an 8.2% increase in bills from 15 November.

Start Quote

Social media car crash: British Gas hike energy bills by £123 and then ask Twitter what it thinks.”

End Quote
Energy debate

On average, customers will see a dual-fuel bill increase to £1,444 a year.

However, there are significant regional variations. On average, the biggest increase in a dual-fuel bill is an 11.2% rise in the north of Scotland, in the Scottish Hydro Electric region. The smallest is a 6.8% increase in the south west of England.

The company said that the cost of buying energy on the global markets, delivering gas and electricity to customers' homes, and the government's "green" levies, were all factors in the decision to put up prices.

"I know these are difficult times for many customers and totally understand the frustration that so many household costs keep on rising when incomes are not keeping pace," said Ian Peters, managing director of British Gas Residential Energy.

"We haven't taken this decision lightly, but what is pushing up energy prices at the moment are costs that are not all directly under our control."

Tom Lyon from comparison site uSwitch said customers should fix their energy bills - "do it today"

The company, which operates as Scottish Gas in Scotland, said it made a profit of five pence in the pound after tax.

British Gas, the UK's biggest energy supplier, said in May that a profit boost would be used to delay future price rises. This came because customers used 18% more gas in the first four months of the year owing to the cold weather.

At the time, a spokesman said: "We will use that [cold weather benefit] to effectively hold prices for as long as possible."

Between August and December last year, the "big six" energy companies outlined price rises of between 6% and 10.8%.

Graphic of when the six major providers have changed gas and electricity charge.

Caroline Flint, shadow energy secretary, said: "These latest price rises show clearer than ever why Labour's price freeze is needed." Party leader Ed Miliband has pledged a price freeze for 20 months if his party wins the next election.

But the prime minister branded Mr Miliband's price freeze plan as a "con", saying that he did not have control over the worldwide price of gas.

Start Quote

In truth politicians of all colours are having to grapple with not one energy crisis but three: rising bills, climate change and the very real threat of blackouts. ”

End Quote

Mr Cameron also said he was disappointed with the British Gas' announcement.

"I would encourage customers who are not happy with the service they're getting, are not happy with the prices, to go to the switching sites online and see whether they can get a better deal," he said.

Pressed on whether the government could do more to tackle the underlying issues, Mr Cameron added: "What we can do, which is what we are doing, is to try to get new suppliers into the market."

'Shop around'

Energy Minister Ed Davey also described the latest price rise as "extremely disappointing news" for customers of British Gas. He questioned the claim that costs imposed by the government were increasing as much as bills and told the Commons that unhappy consumers should consider switching suppliers.

However, industry analysts expect other suppliers to announce price rises in the coming weeks, which could affect consumers' switching decisions.

"The question now is whether it will be a trickle or a stampede. However, the fact is that households will be struggling to afford to keep warm this winter," said Tom Lyon, of price comparison website Uswitch.com.

Ofgem data shows the number of people switching energy companies is at the lowest since records began in 2003.

Out of more than 27.7m electricity customers, 658,000 people switched companies in the three months from March to June in 2013, 17% less than the same quarter a year before.

For gas, out of nearly 22m customers, 490,000 people transferred over the same three-month period, a 14% decline from 2012.

Personal finance commentator and campaigner Martin Lewis said it was important that, if consumers do decide to switch, they should focus on fixed rate tariffs.

Energy Secretary Ed Davey: "British Gas needs to explain why it is so much more inefficient"

Because only two of the energy companies have currently put their prices up, those who switch now are likely to be hit with price rises if they switch to another variable rate tariff.

He said people can "beat the price hikes" by going to fixed tariffs.

Adam Scorer, of watchdog Consumer Futures, said: "We would urge anyone worried about their energy costs to shop around to try to find a better deal and ensure they are on the cheapest payment method, such as direct debit.

"There are also some discounted insulation and heating measures available and we would encourage people to take advantage of this to cut their bills."

Mr Davey said that British Gas would need to justify its decision "openly and transparently".

Many of British Gas's customers made their annoyance at the price rise known during a Twitter question and answer session with customer service Bert Pijls earlier this afternoon.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • Prostitute in red light district in Seoul, South KoreaSex for soldiers

    Did Korea encourage prostitutes near US military bases?


  • LuckyDumped

    Why times are bad for India's professional rubbish collectors


  • A Hindu worshipper slaughters buffalo at the Gadhimai festival in NepalIn pictures

    Hindu worshippers flock to Nepal for controversial sacrifice festival


  • Walmart employees and supporters block off a major intersection near the Walton Family Foundation to stage a protest calling for $15 an hour and consistent full-time work in downtown Washington October 16, 2014. Black mark

    Wal-Mart workers revolt against the annual shopping bonanza


From BBC Capital

Programmes

  • All-inclusive holidaysThe Travel Show Watch

    With all-inclusive holidays seeing a resurgence are local trades missing out to big resorts?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.