British Gas turns up bills by £100 with record tariffs

Average household's annual budget to be hit from next month by three-figure hike

Click to follow
The Independent Online

British Gas is set to increase its gas and electricity tariffs to record levels, adding up to £100 a year to household bills.

The country's biggest power supplier is preparing to reveal as early as today that it is putting up its energy prices in "high single digits" – close to the nine per cent increase from its rival, Scottish & Southern Energy, that comes into force on Monday.

The average British Gas dual fuel bill for gas and electricity now stands at £1,260. A five per cent rise would add £63, while an eight per cent increase would be £100.

The new higher prices are expected to kick in next month.

The supplier, which has about 16  million domestic customers, will say it was forced into the move by rising wholesale energy and other costs. However, consumer groups insisted its huge profits mean it could easily afford to delay the rise.

Parent company Centrica's profit was up 15 per cent to £1.45bn in the first half of the year. That included £345m, a 23 per cent rise, from supplying power and heating to homes.

The planned move will raise new fears for the growing number of Britons in fuel poverty – those who spend more than 10 per cent of their income on gas and electricity.

Ann Robinson, director of consumer policy at uSwitch, said: "This announcement will send consumers reeling. It is the death knell for any hope that suppliers would hold off from price rises until after winter. Consumers will be bitterly disappointed. The pressure of an extra £100 or so on energy bills will leave many buckling and forced to face another winter when they are scared to turn on heating for fear of cost."

Last year, when all the big-six power suppliers increased their prices, eight in 10 British households rationed their energy use because of cost worries.

The shadow Energy Secretary, Caroline Flint, said: "People will not understand why British Gas are putting up prices after their interim financial report showed profits on UK residential customers up 23 per cent compared with the same period last year."

British Gas warned as early as May that bills would have to go up. From Monday, average dual fuel bills for the five million customers of Britain's second-biggest energy company SSE, which operates in London as Southern Electric, will hit £1,354 a year.

Other big suppliers – including EDF, Scottish Power and npower – are now expected to announce higher prices. E.ON, the only supplier to guarantee a price freeze for 2012, this week refused to extend this commitment into 2013.

All suppliers cut prices at the start of the year, with British Gas lowering its electricity tariff by five per cent. Wholesale costs have remained well below their peaks this year, but the prices that British Gas has had to pay for gas in advance of the winter are about 15 per cent higher than last year.

In hot water: Bosses in the line of fire

Sam Laidlaw

The chief executive of Centrica, British Gas's parent company, is unlikely to suffer from fuel poverty. The Old Etonian comes from a monied family, with his father being one-time chairman of BP. He was part owner of a luxury £200,000 yacht until it was sold earlier this year. And his London home is in one of the most exclusive streets in Chelsea. His pay package totalled £4.1m in 2011, taking into account salary and bonuses. He is entitled to receive shares worth an extra £5.05m in 2014 if company profits continue to surge.

Phil Bentley

The managing director of British Gas likes to be seen as straight-talking and honest, although some see him as simply blunt. The 52-year-old Yorkshireman was paid £681,000 last year, but his total salary package was believed to top £1m. Mr Bentley, who has two children, has a more modest London address than his Centrica boss – in Teddington, south-west of the capital. But he also owns a home in Dorset. He has been with Centrica for 12 years and has learnt to attack quickly when the thorny subject of rising energy prices is raised.