Household gas bills 'to rise a further 15%'

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The Independent Online

Domestic gas prices are likely to rise by a further 10-15 per cent early next year and remain at their current high levels for the rest of this decade, according to a stark warning yesterday by industry experts.

Domestic gas prices are likely to rise by a further 10-15 per cent early next year and remain at their current high levels for the rest of this decade, according to a stark warning yesterday by industry experts.

The forecast from the body representing the UK's leading North Sea oil and gas producers, also says that the liberalisation of the European gas market is unlikely to lead to significantly lower bills because the wholesale cost of gas will continue to be linked to oil prices, which are currently at record levels.

Consumer groups attacked the findings of the report and called for a Europe-wide investigation into the high price of gas, which has also fed though into increased household electricity bills.

The report, carried out by the independent consultancy Ilex on behalf of the UK Offshore Operators Association, says that despite efforts to liberalise the European gas market and build new import facilities to ease gas shortages in the UK, gas prices will continue to track oil prices.

Assuming an oil price of more than $30 a barrel through to 2010, this will mean wholesale gas prices remaining above 30p a therm - more than twice their level 18 months ago.

A further 10-15 per cent increase in domestic gas prices would increase the average household bill from £405 now to between £445 and £465. British Gas, part of the Centrica group, has raised its gas prices by 18.3 per cent this year with the last increase coming in September.

A spokeswoman said last night that it had no need to raise prices again this winter, meaning that bills will not go up between now and next March. However, many energy suppliers may have little option but to put up bills with the wholesale price of gas for next January having soared to more than 50p a therm in the past few weeks.

Allan Asher, the chief executive of Energywatch, dismissed the report as "little more than gas producers voting themselves a £5bn windfall each year at the expense of the consumer" and called on Brussels to begin a Europe-wide investigation into the behaviour of gas producers and shippers.

But the authors of the Ilex report said they had found no evidence of market abuse. They said that gas was typically traded about 14 times before finally being delivered, making price manipulation difficult to achieve.

Separately, Ofgem, the energy regulator, announced that, based on the latest forecasts, Britain had enough gas supplies to withstand the kind of "Siberian winter" expected once every 50 years without blackouts. According to the estimates from National Grid Transco, electricity generators have a 20 per cent plant margin or "safety cushion". However, big industrial users on interruptible contracts might have to agree to stop production and sell gas back to the network to meet domestic demand and keep power stations operating.

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