The Courier & Advertiser (Angus and Dundee)
British Gas to hike electricity prices by 12.5%.
Government warns increase will hit customers on poor-value tariffs
British Gas’s move to hike electricity prices by 12.5% for 3.1 million customers will hit those already on poor-value energy tariffs, the Government has warned.
The Department for Business, Energy and Industrial Strategy (BEIS) raised concerns over the energy giant’s price rise and called for “rapid progress” on regulator Ofgem’s plans for reform.
British Gas said its electricity prices would go up on September 15 and would mean an average dual fuel bill for a typical annual household tariff will rise by £76 to £1,120 – a 7.3% increase.
The Centrica-owned group said it will give more than 200,000 vulnerable customers receiving the government’s warm home discount a £76 credit to offset the tariff increase.
But the price rise was condemned by the Government and saw consumer groups repeat their plea for households to switch and fix to get the best deal.
A BEIS spokesman said: “Energy firms should treat all their customers fairly and we’re concerned this price rise will hit many people already on poor-value tariffs.”
British Gas is the last of the Big Six providers to increase prices after it promised in December last year to freeze tariffs until August, with its rivals moving to raise bills at the start of the year.
The rise was also announced alongside half-year results from British Gas owner Centrica revealing earnings from its consumer business plunged by more than a quarter after it lost 377,000 UK customer accounts in the first half.
Underlying operating profits from its UK home energy supply arm tumbled 26% to £381 million as the group said it was also hit by warmer than normal temperatures and the pre-payment tariff cap.
Centrica’s overall underlying operating profits were 4% lower at £816m for the six months to June 30, but shares rose 2%.
The group said the increase was its first since November 2013 and insisted its overall electricity costs had increased by 16% since then.
Centrica chief executive Iain Conn told BBC Radio 4’s Today programme that while the commodity price of electricity had come down, it was facing “significant cost pressure” on transmission and distribution, as well as costs associated with government policy.
He added: “The net effect of both of these is an increase of about £62 on the average bill, and that is the main driver of the increase, combined with the fact our electricity prices at British Gas have been some of the cheapest in the market, and actually we’re now selling our electricity at a loss, which is clearly not sustainable.”