British Gas hikes energy prices by record 22 per cent

British Gas hikes energy prices by record 22 per cent

	Published : Sat, 18 Feb 2006 10:40 By : Richard Owen Print this Story

LONDON: Power utility company Centrica Plc. announced Friday its British Gas will increase energy rates by 22 per cent effective 1 March. The increase constitutes a record and will push average annual household energy bills over 1,000 pounds.

The company had in September last year increased the rates by 14.2 per cent. It said in a statement the spiralling energy prices have been caused in part "by anti-competitive practices in Europe". It was paying 63 per cent more for its gas now compared with last year and that it had still not passed on the difference to customers.

Energy sector analysts came out with estimates that with the current increase, British Gas's prices have risen by 70 per cent for gas and by 65 per cent for electricity since 2003.

Centrica said in spite of the current increase, British consumers are paying substantially less than customers in Germany, France and Italy.

It said nearly two million customers who have signed up for the company's price capping schemes would not be hit by the latest rise. The company also promised to make 300,000 "winter rebate" payments worth 90 pounds to each vulnerable fuel customer.

An European Commission report Thursday highlighted problems in the EU's electricity and gas markets, including lack of cross-border competition and that consumers are denied choice.

Britain's regulator, The Office of Fair Trading, said the average wholesale gas price rise has been over 65 per cent in 2005 compared with 2004 and this has been partly due to problems elsewhere, like the one pointed out by the European Commission.

Energy regulator Ofgem revealed that British customers have spent 1 billion pounds more for gas this winter because neighbouring EU states have curtailed their supplies. This amount could rise to 3 billion pounds next winter.

Centrica's managing director Mark Clare said the energy map is being redrawn with Britain now dependent on gas imports from Europe -- "a market the Commission says is seriously malfunctioning''.

He said this would probably be the company's last increase in 2006 "assuming the infrastructure is ready to deliver new gas next winter and that proper action is taken following the Commission's findings".

Earlier, two other energy companies -- EDF Energy and Scottish Power -- had announced increases in rates. While EDF Energy, which distributes through London Energy, Seeboard and SWEB, increased its gas prices by 14.7 per cent and electricity prices by 4.7 per cent, Scottish Power hiked the rates by 15 per cent and 8 per cent for gas and electricity respectively.

The other supplies -- Powergen, npower and Scottish and Southern -- are expected to announce their revised rates shortly.

Consumer watchdog Energywatch's chief executive Allan Asher described the increase by British Gas as the most serious single event in two years of trauma for energy consumers. "Other companies are raising their prices, but despite this, British Gas continues to be Britain's most expensive gas supplier," he added.

Energywatch urged customers to seek cheaper suppliers.

The National Consumer Council said successive gas price hikes mean many poor and vulnerable consumers will be forced to switch off the heating or going without other essentials, such as healthy food.

British Gas has 55 per cent of the gas market in the country with 11 million customers and 23 per cent of the electricity market with six million customers.