British Gas and Npower to raise prices fuelling fears of a 'long, cold winter' for more households
Both companies blamed rising costs largely outside their control
Friday 12 October 2012
Fears that more households will be plunged into a “long, cold winter” were fuelled today after two major energy companies hiked their prices.
British Gas put an extra £80 on to its typical annual dual fuel bill after an average increase of 6% affecting 8.5 million customers from November 16.
Rival Npower followed with an average rise of 8.8% for gas and 9.1% for electricity.
Both companies blamed rising costs largely outside their control, but with food and some mortgage costs also on an upward path there were fears about how the elderly and hard-up will cope with the latest rises.
The pre-winter move from British Gas comes months after parent Centrica posted a 23% rise in half-year profits at its residential arm to £345 million.
Unions and consumer groups attacked British Gas and called on the Government to take urgent action to tackle rising fuel prices.
Unite general secretary Len McCluskey said: “With winter approaching, low-waged people will now be terrified about how they are going to find another £80.
”Money from the poor is going to the pockets of Centrica shareholders. This is further shameful abuse by out-of-control, greedy fuel companies, sitting on piles of profit.“
Consumer Focus recently said six million households in England were planning to cut back on their heating this winter because of cost worries.
It has encouraged customers ”to do what they can“ to cut their bills by switching tariff, payment method and supplier.
Its director of energy Audrey Gallacher said no-one has managed to convince consumers of the necessity for price rises in the context of wholesale prices and company profits.
She added: ”We need much more focus on the big steps that Government and the regulator can take to insulate consumers from the effects of growingenergy costs.“
Consumer Focus said today's price rise from British Gas will see the company's average annual energy bills reach almost £1,265 for direct debit customers and £1,347 for cash and cheque customers.
The rise from npower comes into force on November 26 and according to Consumer Focus will result in a typical dual fuel customer paying £1,252 by monthly direct debit. The figure for cash or cheque is £1,357.
The supplier has 6.5 million residential gas and electricity accounts.
SSE, which trades as Southern Electric, Swalec and Scottish Hydro, has already said it will increase tariffs by 9% on average on Monday, hitting about five million electricity customers and 3.4 million gas customers.
Mike Jeram, of Unison, said: ”It will be a long, cold winter for many pensioners, the unemployed and for low paid workers and their families.
“Just days ago we learned that the cost of fruit and vegetables have gone up by a massive 50% in the last year. Any increase in energy prices is likely to tip more families into debt and into the hands of unscrupulous pay-day loan companies.”
British Gas put gas and electricity tariffs up by 18% and 16% respectively in August 2011, blaming higher wholesale costs, but this was followed by a drop of 5% in electricity tariffs in January when prices eased.
British Gas managing director Phil Bentley said: “Britain's North Sea gas supplies are running out, and British Gas has to pay the going rate for gas in a competitive global marketplace.
”Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers' homes, and the costs of the Government's policies for a clean, energy-efficient Britain, are all going up.“
Centrica said prices in the wholesale market for gas this winter are around 13% higher than those paid for the same period last year.
Assuming normal weather conditions and despite today's price rise, Centrica said British Gas Residential profits for the second half of 2012 are expected to be around 15% lower than for the same period of 2011.
Centrica estimates its residential margins after tax in 2012 will be 5p in the pound - a similar level to last year and lower than the prior year.
Mr Bentley said: ”Unfortunately, we cannot run our business sustainably on lower margins and still make the investments in jobs and future energy sources that Britain needs, especially if the country is to grow its way out of recession.“
Attention will now switch to the other big suppliers - EDF and Scottish Power - while E.ON has guaranteed a price freeze for 2012.
Further utility bill increases will play havoc with the Bank of England's inflation forecasts, which predicted a gradual slide in the consumer price index rate towards the end of the year and into 2013.
While inflation has fallen from 5.2% in September last year to 2.5% in August this year, many economists expect the rate to rise again as droughts in the United States and poor summer weather in the UK have meant higher food prices.
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