British Gas customers facing another price rise

British Gas customers may see their bills increase again this year after the supplier warned its profits are being hit by the rising cost of wholesale gas.

Its owner, Centrica, says wholesale gas and power prices in the UK remain “stubbornly high” with costs in the second half of 2008 likely to be double those in the same period of 2007.

In a statement to investors, Centrica warns: “Overall group operating profit for the first half of the year will be materially lower than the first half of 2007.

“[...] While the current outlook for gas prices does create a challenging environment for energy suppliers, we will take the necessary action to deliver reasonable margins in the retail business.”

In February, British Gas - which has a market share of nearly 50% - increased the cost of gas and electricity by 15%. Other top suppliers, including EDF Energy and npower, also increased their prices.

Wholesale gas prices are now 92% more expensive than last year, while power prices have increased by 100%, according to Centrica.

It says this has caused profit margins in British Gas to be “squeezed”.

British GAs is unlikely to be the only energy supplier considering further price increases.

Paul Schofield, head of utilities at, says Centrica warning means Britain's bill payers may have to withstand soaring energy bills this year.

He adds: "Now is an excellent time for consumers to review the energy market and make sure they have the right provider and product for their area and consumption. Online monthly direct debit accounts offer the best prices, and only require customers to have an email address and apply online.

"There is no need for customers to manage the account online as payments are by direct debit. Those still languishing on standard deals should act now and jump onto the best online deal which could save consumers nearly £250 a year."

Schofield also reccomends people consider "fixed" tariffs to avoid any further price hikes. However, this could cost £200 more than cheaper alternatives.

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