Record Gas Prices Hike 35 per cent by British Gas
Centrica PLC, owner of British Gas has announced it will raise prices for domestic gas by 35% and for electricity by 9% with immediate effect. The UK's biggest domestic energy supplier blamed "soaring wholesale energy prices", but added that standard tariff prices would not rise again in 2008.
Simultaneously Centrica has revealed a 20% drop in profits (to £992 million) in the first six months of 2008, from £1.23bn a year earlier, with the firm blaming higher wholesale gas prices.
EDF Energy has raised the cost of heating and cooking gas by 22% and electricity by 17% earlier this week. It is expected other energy companies will follow suit shortly.
According to British Gas, which has 15.9 million customers in the UK, the average dual fuel bill would go up by 25%. This will take the average dual fuel bill to £1,240.
Energywatch, the industry watchdog, said that the 35% increase to heating gas is the biggest single increase in the price of utility to date.
British Gas Managing Director Phil Bentley said: “We very much regret that we have had to make this decision at a time when many household budgets are already under pressure. The simple fact though is that we have entered an era of unprecedented high world energy prices."
In a recent report commissioned by Centrica (see our news report Cost of Heating and Electricity to Climb Over £1,000 for more details) it was expected that the cost of gas could reach £1,000 early next decade. According to Centrica, they expect wholesale gas prices to rise 89% in the coming winter. The fact that the UK’s gas reserves are diminishing and the production from the North Sea fields is substantially reduced means that the UK has to import around 40% of this year (compared with 27% last year).
Survey of plumbers and heating engineers has highlighted the fact that the recent increases in cost of heating would raise the levels of fuel poverty (which is defined as a situation where fuel bills account for more than 10% of the household income).
This page has been written with contributions from experienced heating engineers from Kent and plumbing and heating engineers from Bromley. Several of the company's heating engineers from Hertfordshire have worked on similar issues as well as some of our Gas Safe engineers from Highgate and our Croydon plumbers.
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