British Gas to raise prices again from September
British Gas is to raise gas and power prices for the second time in 2006, and the third time in less than 12 months, as a result of rising wholesale prices.
Gas prices will increase by 12.4% and electricity prices by 9.4% effective from 4th September 2006. This will add £78 to the average annual standard credit British Gas gas bill, and £37 to the average annual standard credit British Gas electricity bill.
In March British Gas increased prices by 22%, although the wholesale cost of gas has risen roughly 30% since then. EDF Energy announced earlier this week that it would be raising gas bills by 19% from next Tuesday with electricity up 8%, while Scottish Power said two weeks ago that it would also be raising prices.
Scottish and Southern Energy is the only company to have pledged no further rises in 2006 for its residential customers, and can now claim to be the third largest supplier of gas and electricity in the UK, with more than 7 million customers. Centrica leads the field with 16.6 million customers.
In a statement, Mark Clare, British Gas managing director, said: “This winter is crunch time for the wholesale cost of gas. As a result of the investments and commitments we have made we can see some light at the end of the tunnel but it’s still a winter away. During 2007/08 we should see new infrastructure coming on stream putting downward pressure on wholesale energy costs.”
Clare added: “As Britain becomes increasingly dependent on imports we are much more exposed to the factors that impact global gas prices. We also face a huge anxiety premium in the cost of this winter’s gas because of the impact of soaring oil prices and uncertainties over how much new gas will flow from Europe. Last winter’s experience has shown that new pipeline capacity does not guarantee the flow of gas.”
British Gas’ parent company Centrica posted a first-half operating profit of £692 million (EUR 1,012 million, see separate story) on Thursday, down 29% year-on-year.
British Gas Residential Energy delivered a £143 million H1 loss, compared with an operating profit of £165 million in H1 ’05.
British Gas Business posted an operating profit of £11 million, down 80% from the first six months of 2005, due to a sharp increase in wholesale costs: average weighted input costs for gas and electricity climbed 77% and 64% respectively in the period. BF
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