British Gas pile on the pain with 35% price hike
By Tony Watts - Editor - 30/07/2008
Consumers have been dealt another hammer blow today as British Gas, Britain’s biggest energy supplier, announces its second price increase in six months. The increase – 35% for gas and for electricity - comes into effect today. The price hikes could trigger more rises from other suppliers and push millions more households into fuel poverty.
The move is a second nail in the coffin for affordable energy, says price comparison site uSwitch.com, while energywatch has condemned the move, saying that: “No one seriously thinks that the range of measures from suppliers or the programmes available from government are fit for the purpose of fighting fuel poverty."
The average household energy bill will now cost £1,126, but while everyone will feel the pain of the new price hike, those on low and fixed incomes will be hardest hit – including many of the country’s 11 million pensioners.
British Gas is the second major energy supplier to announce a second price rise this year, blaming wholesale pricing pressures. All suppliers are expected to follow suit with a second wave of price increases. – industry insiders have been predicting further increases of up to 40% this year.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “This is the second nail in the coffin for affordable energy in the UK - with every price increase we are edging closer to household energy bills hitting a record high. A potential £555 increase in one year will be a lot for households to absorb and will prove impossible for some. But the bigger obstacle will be making the longer-term adjustment to paying far higher energy prices - there will be casualties along the way.
“Consumers should begin to make the adjustment now by cutting back on their energy usage and making sure that they are paying the cheapest available price for what they are using. This will help limit the impact of soaring energy prices bills.”
Adam Scorer, energywatch Director of Campaigns, said: "The fact that British Gas has trailed this announcement so heavily will not make an ounce of difference to the impact of this massive price hike.
“A consumer who just takes their gas from BG is going to see a massive 35% jump in their prices. I’m not sure that many will be able to take that news in.
“It's the consumer's bottom line that matters to us, not Centrica's. But at a time when suppliers have been complaining about higher costs and difficult times, customers may be looking with some interest at the Centrica profit statement tomorrow morning.
“Whatever the profits made by Centrica these price rises are primarily driven by an irrational and toxic link between the price of gas and the price of oil. Just because decoupling that link may be complex and not certain to succeed quickly, is no excuse for not trying. It is now an absolute imperative that Government directs the European competition authorities to explore ever avenue that might return some sanity to the gas price.
“High prices seem hardwired into this market for the foreseeable future. That hits the poor the hardest. The most important policy issue facing the government is how to protect vulnerable consumers from these hammer blows. So far it has not taken the necessary steps to fight fuel poverty yet. It needs to act now.”