British Gas hikes bills by 12.4%

MILLIONS of British Gas customers are set to see household bills soar, after the group announced it would hike prices for the second time this year.

Prices will rise by 12.4% for an estimated 12.2m gas users and 9.4% for its 6.2m electricity customers, with effect from 20 September. The move will cost the average user an extra seven pence a day on electricity bills and 13p a day on gas bills.

It means an average household can expect their gas bill to rise from £378 to £425, while the average electricity customer will see their annual bill rise from £245 to £268.

The energy giant is certainly not shy of raising prices for domestic customers. In January of this year it put up gas and electricity prices by an average of 5.9%, while in the last two years alone it has increased gas prices three times.

Perhaps unsurprisingly in light of the frequent cost hikes, more than 200,000 people abandoned British Gas for a new energy supplier in the first four months of this year alone.

British Gas blamed the rising cost of gas for the need to pass on further increases to customers. It said figures based on data from the International Petroleum Exchange (IPE), showed the average wholesale price of gas was up by 28% in 2004, compared to the previous year. It is also forecast to rise by a further 25% in 2005.

At the same time, average wholesale electricity prices have also increased by 22% over the same period, according to the IPE's monthly index, with prices predicted to rise a further 28% in 2005.

Mark Clare, managing director of British Gas said: 'The UK energy industry has never faced such high wholesale prices – looking forward the price for 2005 is more than 50% up on 2003 prices.

'We have absorbed as much of these additional costs as we could, but unfortunately we now have to pass a proportion of them on to our customers.'

It has been a bad year for gas and electricity customers. In July Atlantic Electric and Gas increased energy prices for existing customers by a hefty 18%, while Powergen put up gas and electricity tariffs by 3%.

In fact gas bills have been rising steadily since April 2001, when the energy regulator ended the price capping that had been imposed on British Gas since privatisation.

The rising cost of energy is also likely to see other suppliers introducing increases to their tariffs, in a bid to reduce their costs.

Consumers looking to reduce the size of their bills can compare the cost of gas and electricity, from a range of suppliers by logging on to www.uSwitch.com, an online comparison service.

Simply Energy also has a free telephone service on 0800 781 1212.