01-07-05
As bills for millions of homes will soar by 15 % to levels which have never been "seen or done before", Britain's biggest supplier warned. The rise will hit consumers across the UK who are already reeling from two major price hikes last year which saw bills increase by more than 18 %.
Campaigners and politicians warned that low-income families and the vulnerable
would suffer most from the charges, and called on the company to intervene to
lessen the blow.
But Centrica, which owns British Gas and Scottish Gas, said it had no choice but to pass down the price rise to its 12 mm gas customers due to "spectacular" increases in the world wholesale trading market. The company has not set a date for when the changes will be brought in but said it would have to be introduced "sometime this year".
Centrica said its electricity prices also would rise and experts warned last
night that other companies are likely to follow suit with major price rises.
Consumers already are facing record petrol prices because of the rising cost of
oil which was hovering just below the $ 60-a-barrel mark.
Graham Kerr, a spokesman for Energywatch Scotland, said the independent consumer watchdog expected to see a rise in people struggling to pay increased energy bills.
"There is only so much people can afford to pay before it becomes utterly
unbearable. This impact will have a severe effect on people on low incomes who
have to make daily choices on how to budget the limited funds they have. It will
put a lot of people back into fuel poverty just to heat their homes. We would
strongly suggest the company gets its act together and introduces social tariffs
which would allow low-income households to get a fixed amount of fuel at a fixed
price to cover the essentials and give them a reasonable standard of living."
The gas bill for an average family is currently £ 407 while electricity is £ 283 -- when an average is taken from across the main six suppliers, Energywatch said. The group expects these prices to go up by about 10 % -- making gas and electricity bills about £ 70 more expensive in total.
Graeme Millar, chairman of the Scottish Consumer Council said British Gas
appeared to be more interested in increasing its profits to shareholders than
giving customers a fair deal.
"This appears to be a financial exercise which is really quite insensitive.
Their gas prices have risen far higher than other companies. They would have had
a choice to impose a smaller increase or to have delayed their decision. While
they may point out that they have given warning of their intention this is not a
real indication of how it is going to affect those who need to watch every
penny."
Defending the expected price rise, Centrica said wholesale gas prices were now expected to be 51 % higher than a year ago and more than the 44 % rise predicted at its annual meeting in May.
Phil Bentley, Centrica's finance director, admitted that the latest increase was
uncharted territory in terms of increased costs to customers.
"We're talking about price rises that no-one has seen or done before. We thought
12 % was pretty racy last year and it's fair to say it will be more than that
[this time]," Mr Bentley said. Mr Bentley added that the 15 % gas price rise was
the "sort of ballpark" Centrica expected to make.
Mark Clare, managing director of British Gas, said record wholesale gas prices meant all energy companies were having to consider the possibility of price increases for customers.
"All suppliers are facing declining UK gas reserves, high oil prices and the
lack of access to European pipelines to get new gas surplus to the UK," he said.
"In the long term, the better news is the investments British Gas is making to
secure future energy supplies should help put downward pressure on prices which
in turn would benefit consumers."
Jeremy Nicholson, director of the Energy Intensive Users Group, which
represents companies that use large amounts of energy, said:
"This puts manufacturers in an awful position. If they are able to pass the
costs on to consumers they will, but manufacturing firms are often competing in
international markets and can't, and so it harms their profits."
British Gas has lost 445,000 customers this year. This is on top of the 1.1
mm who took their custom elsewhere last year making the company suffer a
backlash for the January and September price increases. Centrica has admitted
that first-half profits at British Gas would fall short of the £ 274 mm reported
a year ago because of customers deserting to rival suppliers.
However, Centrica have said they were putting faith into products such as
contracts that cap fuel prices for three years which they said have helped slow
the flow of customers away from British Gas to around 10,000 a week since May
from more than 22,000 beforehand.
Shona Robison, the SNP shadow health minister, said the rising gas prices would force some families to choose between food or fuel.
"It is very unfair of British Gas, who make such massive profits, to pass this
increase on to customers, particularly those on low and fixed incomes. It will
increase poverty among groups like the elderly, many of whom are trying to get
by on their pensions. I also dread to think how it will affect the health and
well-being of those with babies and young children who have so many other calls
on their resources." The Scottish Executive also backed calls for fuel companies
to look at their responsibilities towards vulnerable customers.
An executive spokeswoman said: "Any energy price rises are regrettable. We understand that companies are facing pressures in relation to the wholesale fuel market.”
"But as ministers have made clear on many occasions, we expect companies to look
at ways of ensuring their most vulnerable customers are not unfairly affected."
Source: Scotsman.com News