British Gas to increase energy prices

13 June 2011

British Gas customers will see their energy bills go up this winter. Sir Richard Carr, chairman of Centrica – the parent company of British Gas – says rises are inevitable.

Carr's admission comes just days after ScottishPower's price hike announcement, pushing its average gas bills up by 19% and electricity by 10%.

Tom Lyon, energy expert for comparison website uSwitch, says he would be "absolutely staggered" if British Gas and the rest of the big six don't push up their prices.

British Gas, the largest UK energy supplier, refuses to comment on how much its own energy prices will go up by but Carr has come out citing the government's green energy policies for future rises.

"Ofgem has said that it would see over the next decade a dual fee bill going up by £500 a year for a typical consumer and that's related to decarbonisation rather than market forces," he says.

The chairman's comments echo those of ScottishPower's UK retail director Raymond Jack, who in part blames the "rising burden of non-energy costs" for providers charging more for gas and electric: "The cost of meeting government environmental and social programmes and the cost of distributing electricity on the national grid, has placed further upward pressure on energy bills."

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No accountability

Despite the suppliers' protestations, consumer groups say a lack of accountability in the market means energy companies can charge what they like: "Suppliers say they have no choice when costs go up, but no-one else really knows if energy prices are fair. When this affects the cost of keeping warm and well, it is not an acceptable state of affairs," says Audrey Gallacher, head of energy at Consumer Focus.

Lyon agrees the lack of transparency is "the fundamental problem with the industry". He adds: "We hear suppliers talk about rising wholesale prices - then affecting customer prices - but we don't know what these wholesale prices are and therefore whether the price rises are justified or not."

Calling the renewable energy targets "very aggressive", Lyon does concede that energy companies face an upward battle in terms of future costs: "A staggering amount of investment is needed in the next 10 years and absolutely huge figures are being bandied around in the region of £200 billion. But it's not been made nearly clear enough by the government how that's going to be paid for."

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