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The £100-a-month fuel bill is to become a reality for millions more families after record energy price rises were announced yesterday.
The increases of up to 44 per cent for ten million British Gas customers were branded “indecent” last night as MPs stepped up the pressure for a windfall tax on energy companies.
The biggest rises will hit families in London, the Midlands and southern England as the company, which is expected to announce multimillion-pound profits today, introduces a new regional pricing structure.
Gas bills rise by an average of 35 per cent and electricity by 9 per cent, pushing the annual energy bill for a British Gas dual-fuel customer up £263 to £1,314, a rise of 25 per cent.
MPs and campaigners said that British Gas was being greedy. “These rises are indecent,” said Lindsay Hoyle, a member of the Commons Business and Enterprise Committee. “If anything underlines the urgent need for a windfall tax on greedy energy companies, it’s rises like these.”
The company made a profit of £571 million last year. Its embarrassment is likely to worsen after it emerged that the wholesale gas price collapsed a day before its announcement.
The bill increases are expected to add a million households to the 4.5 million already facing fuel poverty – defined as having to spend more than 10 per cent of income on energy.
The country’s four other main power suppliers – ScottishPower, E.ON, npower and Scottish and Southern Energy – are expected to announce their own increases within days. Centrica, the owner of British Gas, said that it had taken the step because it was being forced to pay an extra £2 billion this year to meet the soaring wholesale cost of gas, which it said had risen 89 per cent over the past year.
British Gas can expect to pay less for its fuel in the short term, however, because the price of gas for delivery the following day has plummeted. It decreased by almost 50 per cent on Tuesday on the back of falling oil prices and weakening demand.
The firm’s announcement, which follows a similar rise by EDF last Friday, will add to the economic misery for millions of people struggling with spiralling bills for mortgages, food, council tax and insurance.
Phil Bentley, the managing director of British Gas, said that he regretted the increase but the business was operating “at a significant loss” and would otherwise dip hundreds of millions of pounds into the red.
Mark Todd, of energyhelpline.com, called it the “biggest energy price rise in history”, a claim that Centrica did not deny. Gordon Lishman, of Age Concern, said that the increases were a “hammer blow” for vulnerable groups such as the elderly.
Charles Hendry, the Shadow Energy Minister, said that people faced a desperate winter. “These increases will come as a shock to every home in the country. Britain is being hit especially hard as the Government has utterly failed to prepare for rising fuel prices during the years of relatively low bills.”
Nick Clegg, the Liberal Democrat leader, said the rises were unacceptable. “Energy companies are benefiting from a £9 billion windfall yet continue to hike up their prices on the Government’s watch.”
The consumer group Energywatch blamed the rises on a lack of competition in Britain’s energy market, but Mr Bentley pointed to global factors. “The simple fact is that we have entered an era of unprecedented high world energy prices. We can’t absorb the impact of such high wholesale prices.”
For the first six months of the year British Gas profits fell 69 per cent to £166 million against £533 million for the first half of 2007. Centrica blamed rising wholesale gas prices, linked to the price of oil, on the depletion of North Sea supplies. Britain will import 40 per cent of its gas this year, up from 27 per cent last year. The figure is expected to hit 75 per cent by 2015.
British Gas, the country’s biggest energy supplier, has ten million gas and six million electricity customers. About 2.7 million will be unaffected by the rises because they are either locked into fixed-rate contracts or are one of 340,000 vulnerable customers whose prices have been frozen until 2009.
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Why is Scottish Power increasing its prices...it is entirely hydro electric energy. No oil or gas increases there. It can not sell this energy abroad. Market forces...what market forces. The UK energy market is entirely false and designed for the supplier not the customer.
Stephen Morris, London, UK
I can't see the problem. Switch to another provider like EDF. The fact is that too many people are too lazy to look at alternatives. I agree their prices are up 19%, but that is better than the obscene increases from BG
V Cooper, Somerset, UK
BG are currently setting up shop down here in Australia with a view to shipping LNG from here to the UK. Now I wonder what the impact of that will be on your bills?
Where did all the gas from the North Sea go? - Oh yes I remember through the gas turbines of an invented energy market.
Matthew Taylor, Brisbane, Australia
60+ million people living on a tiny island in the North Sea ... how do you expect to support yourselves? You have to bring in practically everything from outside sources, like so many other countries, so you have to pay world prices.
What should the government do, subsidise all your costs???
Malcolm Cottrell, Edmonton, Canada
and CPI is only 3.4%...... NOT!
Ian, Tokyo, Japan
I recently left the UK. the question people always ask me, who are familiar with bad service and ridiculous prices in the UK, is "why do the British never do anything about it?". It should make no sense I have a much higher standard of living here based on a salary a quarter the size.
Moray, Macau,
Strange that they waited until Parliament went into recess to annouce these horrific rises !!!
Adrian, BEXLEY, UK
A 35% increase for the consumer is also a 35% increase in VAT revenue for the government, which is why the "regulator" will do nothing. Any "windfall tax" will result in a fraction of the increase being paid back to a fraction of the populous and an extra burden on the consumer in general.
Eric Pritchard, Clevedon, UK
After squandering our North Sea assets, creating a phoney market in energy and then getting our sourcing wrong it's time to pick up the tab. Will the sharholders of Centrica be taking their chairman's advice and wearing an extra jumper?
Ray Cobbett, Emsworth, Hampshire,
I appreciate this will effect a number of people. However some of my friends see nothing wrong with leaving the heating on all year round. It may make some people less wasteful with their heating and rather than reach for the heating switch at the slightest puff of wind, put a jumper on instead.
Scott, Exeter, Devon
Keep the 'Home Fires Burning' but on 'What' !!!
We will see what we will see .
Malcolm, Neston, United Kingdom
Enron performed this same trick in California mid 1990's.
Enron Energy Brokers moved large amounts of energy out of the state and created phony shortages, and then sold that same energy back at increased prices.
Centrica is doing the same trick here in the UK!
Mark, Maidstone, England
We are now paying the real price of privatisation.After the coal miners strike, thier was the dash for gas. we have been using up the gas in the north sea, while sitting on hundreds of years of coal reserves.Our short sighted politicians have sold us short again.
Bill Rogers, Portsmouth,
British Gas rang me today and said they could give me cheaper electricity with no price rises until 2011.
I let him go on digging his hole and eventually said by the massive hike that you have raised gas prices you will be able to hold the electricity charges until 2011.
Noel Dobson, York, UK
Start collecting the firewood and open up the chimney. Let´s get back to old-school and on a wide scale (UK-wide).
Deny these people the market that they have and within a year or two they´ll be on their knees.
Carl Mantell, Neverland, Out of the Isles
High energy prices are the result of the residents of India and China using a car and heating their houses while in the past they used bicycles and suffered in the cold. No one can begrudge them of what most people in the west consider a basic necessity.
Adrian Gibson, Abu Dhabi, UAE
What I would like to see is the Government prevent the Energy Companies like EDF and British Gas continuing to be able to USE the Magistrates Courts to collect debts. Why on earth Utility companies should be granted the almost exclusive use of Magistrates Courts for what is a Civil Debt is puzzlin
alex, london, uk
£1000 fuel bill? I pay that much now. My fuel cost me 20% of income and is set to rise to 27%
.
Food up by 10%, where? 2ltr of milk was 99p before Xmas, now it's £1.39.
My home is insulated, I don't watch much tv, never listen to the radio, but I am disabled and that means I have to pay top wack.
steve, Burton, England
If the British Government levies a windfall tax on British energy companies then these same companies will not have the cash to bid for the few exploration licenses that become available. It will result in British customers being held to ransom by Putin's Russia for their oil and gas. Is that good?
Adrian Gibson, Abu Dhabi, UAE
All a windfall tax would do is pass more cost to the customer.
With a clever internet campaign Petrol and diesel companies could be targeted on a monthly... basis. Could it be done with energy companies? Considering all the faff involved with changing supplier. If the pain of cost is great enough...
Bob, Leeds,
Supply and Demand Graham.
Steve, Cheltenham,
Stop VAT on all fuel.
steve tea, manchester, cheshire
Remind me again how the market works for a limited resource? Everybody pays a fortune to to get the same share of the resource as they would have done if the price had stayed low. That makes sense.
Graham Rounce, London, UK
I have switched off my gas for the summer, and am getting an electric heater and extra jumper for the winter.
clare, cambridge, uk
a cozy club for energy companies and a daylight robbery. 35% increase is against the logic and it will hit almost everyone. Our government seems to behave just like a spectator , not showing any interest or leadership in this matter. We must break this cozy club and open the market.
Marph, London,
It only means a bottle of wine less per week. The impact will be on those with mal lined priorities!
Brian Putman, Oxford,
571 million divided by 20,000,000 households is £28.55 a year, compare to the £400 or so increase is quite small, so a windfall tax of 100% of profit wont make more than 5% difference, but it will discourage the gas company from investing.
The damage has already been done.
Mark Taylor, Cambridge, Cambridgeshire
I am amazed UK is still one of the cheapest gas markets in the developed world even after domestic supply rapidly decreasing. hopefully the government will allow the storage facilities that it has blocked consistently to be built so spikes wont be so painful.
Jim, London,