British Gas blames green taxes for 12.5% price hike
‘A body blow for consumers’
BRITISH Gas is under fire for increasing its electricity bills by 12.5 per cent at the same time as wholesale costs are falling.
The rise means 3.1million households on standard variable tariffs will pay an average of £76 extra.
The company is blaming green levies, Government policies and a plan to spend billions installing smart meters in every home for the rise.
Consumers are now being advised to switch away from the firm, amid claims it is possible to save up to £286 by moving to the cheapest deal on the market.
The country’s biggest energy supplier is to put up electricity tariffs next month. Its gas prices remain frozen. Households that get their electricity and gas on a dual fuel standard variable tariff (SVT) will see their bill rise by an average of £76 to £1,120.
The firm is the last of the Big Six providers to increase prices after it promised in December to freeze tariffs until August, after rivals moved to raise their bills at the start of the year.
Confirmation of the decision comes after a blunder on Monday saw the group mistakenly publish an incomplete statement about increasing tariffs on its website.
It came as parent company Centrica announced its operating profits for the last six months stood at £816million, down 4 per cent.
Theresa May put energy bills at the centre of her election manifesto, promising a cap that would cut bills for millions on expensive SVT deals by around £100 a year.
But British Gas insisted Government policies are the reason that bills are going up. It said the wholesale cost of power has actu- ally fallen by an average of £36 per customer since 2014.
However, it claimed this was more than wiped out by an increase of £88 to £98 per customer in various Government levies, including those to support wind farms.
It added that the price rise, which comes into effect in September, was its first since November 2013. Centrica boss Iain Conn said: ‘We have seen our wholesale costs fall by about £36 on the typical bill since the beginning of 2014 and that is not the driver.
‘It is transmission and distribution of electricity to the home and Government policy costs that are driving our price increase. We are selling electricity at a loss and that is not sustainable.’ Smart meters are also contributing to rising bills. The devices must be installed in every home over the next three to five years at a cost of £11billion – to be added to all bills.
The Government denied responsibility for the rise, saying policy costs make up a relatively small proportion of bills.
Ministers have asked energy watchdog Ofgem to draft plans to protect vulnerable customers.
The Department for Business, Energy and Industrial Strategy said: ‘We’re concerned this price rise will hit many people already on poor-value tariffs.
‘Ofgem has committed to taking prompt action, in consultation with consumer experts, to develop proposals including a safeguard tariff. We want to see rapid progress on this commitment and are ruling nothing out.’
Ofgem insisted rises of the scale announced by British Gas are not justified by increases in industry costs. It said: ‘It is for British Gas to justify its prices to their customers. Most standard variable tariffs continue to provide poor value, and customers on these tariffs should shop around.’
It emerged yesterday that British Gas lost 377,000 UK customer accounts in the first half of this year, and consumer groups are encouraging others to follow suit.
Alex Neill of Which? said: ‘Cus- tomers concerned about their tariff should switch to a fixed price deal now and the Government should rapidly set out how it intends to make this market work better for consumers.’
Claire Osborne, of uSwitch, said: ‘This is a body blow for consumers. It’s time to switch supplier and send a message that price rises like these just aren’t acceptable.’
British Gas is giving more than 200,000 customers on the Warm Home Discount £76 credit to offset the increase. Centrica yesterday said underlying operating profits from its UK home energy supply arm fell 26 per cent to £381million up to June.
LAST year the Competition and Markets Authority published an excoriating report exposing the greed of Britain’s Big Six energy suppliers.
It found that families had paid £1.4billion in ‘excessive charges’ between 2012 and 2015, loyal customers were being hit with ‘rip-off’ tariffs and ‘confusing and inaccurate’ bills made it very difficult to compare deals and switch to cheaper rates.
By announcing an exorbitant 12.5 per cent rise in its electricity prices yesterday, British Gas (and parent company Centrica) proved nothing has changed. Even though wholesale energy costs have fallen over the last three years and inflation is under 3 per cent, three million customers will be charged an average of £76 a year more.
Centrica boss Iain Conn tried to blame transmission and distribution costs, but that didn’t stop the company making an £816million profit in the first half of 2017.
Where he does have a point, is that consumers are paying a heavy price for the ‘green’ levies imposed by politicians over the years, which British Gas claims have added up to £98 to the average bill since 2014.
Not that Mr Conn himself is doing badly. Last year he received a thumping 40 per cent pay rise, taking his total salary package to £4.15million.
The public is rightly furious at being fleeced to fund such glaring corporate excess and the power companies, virtually all of whom have put up their prices, would do well to take heed of their anger. Theresa May made much of her energy price cap proposal before the election but, in a disappointing climbdown, has now passed responsibility for reforming this rapacious industry to the regulator Ofgem, whose appeasement of the power giants so far gives little grounds for confidence.
The Mail believes passionately in the free market, but when areas of that market become dysfunctional the Government must sometimes intervene to protect the consumer. If a cap is imposed, the Big Six will have only themselves to blame.