Esther Shaw: Turn up the heat on British Gas: look elsewhere

The supplier trotted out the usual excuse for price rises, but it's lost the trust of customers
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I'd like to borrow, if I may, a few words from pop princess Britney Spears, and apply them to British Gas - as it's a case of "oops I did it again," for the supplier, which has just announced yet another round of price hikes.

As we report on page 18, British Gas has put gas prices up by 12.4 per cent, and electricity rates by 9.4 per cent - adding £78 to the average annual gas bill and £37 to the average electricity bill, according to the consumer group Energywatch.

While no price rise is ever welcome, the latest might have been a slightly less bitter pill for customers to swallow, had it been a one-off announcement - or had there been a reasonable justification for it.

Not so.

First off, the latest increase is the third price rise by the supplier in the space of a year, following a 22 per cent increase in March, and a 14.2 per cent rise last September. Energywatch says that prices for gas supplied by British Gas have risen by 91.1 per cent since 2003, while its electricity prices have gone up by 81 per cent. This makes it the most expensive gas and electricity supplier in the UK.

Worse,, the price comparison service, draws attention to a claim made by British Gas's managing director, Mark Clare, in February, when he pledged to limit price rises.

"While there can be no guarantees in such a volatile wholesale market," Mr Clare said then, "we see no need for any further price rises this year."

Last week's announcement, says Uswitch, renders British Gas's public assurances "meaningless".

Second, I have to question the reasons given for the price rises.

British Gas reported losses of £143m during the first six months of the year. As with any supplier announcing hikes, it was quick to place the blame for its decision elsewhere - in this case on "further cost increases in the wholesale energy market".

While there's no disputing that wholesale energy prices have gone up - by 71 per cent in the past 12 months, according to British Gas - I can't help but feel this has become something of a blanket excuse for the energy giants to hide under.

As Uswitch points out: "Rising wholesale prices still don't explain why British Gas remains £213 a year more expensive than the cheapest supplier in the marketplace."

Once again, it seems that customers are the ones taking the hit.

"It's quite clear the interests of British Gas customers come a poor second to the interests of the company's shareholders," Uswitch adds.

While British Gas has been in the limelight over the past few days, it is not alone in announcing price increases. EDF Energy and Scottish Power both put their prices up earlier this month, and all the big UK power suppliers have done so over the past year. And I'm afraid to say I don't think we've heard the end of it.

That said, consumers don't need to take this lying down - and I'd strongly advise any disgruntled customers to view these latest hikes as a spur to action.

Energywatch is advising customers to find out whether they can save money by changing to another company. There's a good chance you will be able to make savings, particularly if you have never switched before. Plenty of online price comparison services are available that make this process easy and convenient.

You could also look at other money-saving methods - such as signing up to fixed and capped-price products, or opting to pay your bills online. You could think, too, about taking steps to improve the energy efficiency of your home.

In an attempt to take off some of the heat, British Gas has launched its own price protection product, "Fix and Fall". This is the first offer of its kind, and allows dual-fuel customers to fix their energy prices for 12 months - with a guarantee that rates will fall by 5 per cent at the end of 2007.

In a statement promoting Fix and Fall, British Gas pledges that it is now "prepared to guarantee a fall in prices" and is "putting its money where its mouth is".

While that sounds good on paper, I just can't help feeling we've heard such promises before.

Sam Dunn is away

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