By Paul Homewood
A 5.5%, or £60 a year, rise in energy prices for British Gas customers on default deals has been branded as “unjustified” by the government.
The company, the UK’s largest energy supplier, said that 4.1 million of its customers would be affected.
The increase will take effect from 29 May and follows its 12.5% rise in electricity prices last September.
British Gas argued that it was raising prices owing to factors beyond its control, such as wholesale costs.
The 5.5% increase, which applies to both gas and electricity, will see the average annual standard variable dual-fuel bill for British Gas customers go up to £1,161.
Energy minister Claire Perry said: “We are disappointed by British Gas’s announcement of an unjustified price rise in its default tariff when customers are already paying more than they need to.”
Energy regulator Ofgem described the increase as “unwelcome” and encouraged householders to shop around.
British Gas said it had to lift prices following a rise in the cost of producing energy – including wholesale costs.
The company pointed to a similar decision by energy regulator Ofgem, which recently blamed wholesale costs for the rise in the default tariff for those with prepayment meters.
Mark Hodges, chief executive of Centrica Consumer, of which British Gas is a part, said: “We fully understand that any price increase adds extra pressure on customers’ household bills. This increase we are announcing today is reflective of the costs we are seeing which are beyond our control.”
He also blamed the extra charges it faced as part of government policy, such as the introduction of smart meters and emissions targets.
“Government policies, intended to transform the energy system, are important but they are putting pressure on customers’ bills. We believe government should level the playing field so the customers of all suppliers pay a fair share of energy policy costs,” Mr Hodges said.
“We continue to encourage government to consider moving these costs out of energy bills altogether and into general taxation.”
http://www.bbc.co.uk/news/business-43711556
Another day, another lie from Claire Perry!
I have argued for a long time that there is a conspiracy to hide the true cost of govt climate policies, led by politicians on both sides and the Committee on Climate Change, and ably abetted by the agenda driven BBC and useful idiots in the media.
So are British Gas’ increases justified or not?
First of all, let’s look at gas, which is pretty straightforward.
According to Catalyst Energy Solutions, wholesale prices for natural gas have increased by 19% in the last year.
http://www.catalyst-commercial.co.uk/reports/174/business-energy-market-brief—apr18/
Wholesale costs only account for part of the total supply cost, but clearly a price rise of 5.5% is not unreasonable.
But what about electricity?
http://www.catalyst-commercial.co.uk/reports/174/business-energy-market-brief—apr18/
Again, we see that wholesale prices have increased sharply.
But more significantly, so too have green subsidies, imposed to meet govt climate targets:
https://notalotofpeopleknowthat.wordpress.com/2018/04/07/cost-of-green-subsidies-rises-to-11-3bn/
This year, the cost has risen from £8.6bn to £10.4bn, an increase of £1.8bn, which equates to roughly 5% on retail electricity prices.
Is Claire Perry not aware of these official figures, which come from the OBR? If not she is incompetent and should not be in the job.
If she is aware, then she is lying through her teeth.
But what about the longer term? Energy companies are often accused of putting up prices when costs rise, but failing to reduce them when they fall.
Fortunately the comparison site, uSwitch, has this potted history:
Recent price changes from British Gas
In August 2017, after freezing prices for six months, British Gas announced it would raise electricity prices by 12.5% on its standard plan customers. This price rise would take effect 15 September.
Claire Osborne, energy expert at uswitch says:
“It’s time to switch supplier and send a message that price rises like these just aren’t acceptable.
“Seven in 10 households are overpaying for their energy on expensive standard tariffs, yet within ten minutes they could switch and save hundreds of pounds – as well as protect themselves against further hikes by fixing their tariff.”
Previously, in February 2017, British Gas had announced it would extend its price freeze until August 2017. This news came after three other big six suppliers — EDF Energy, ScottishPower and npower — had announced price rises of 1.8%, 7.8% and 9.8%, respectively.
See the most recent price changes from British Gas and other suppliers below:
*Based on a medium energy user on a standard dual fuel tariff, paying on receipt of bill, with bill sizes averaged across all regions.
British Gas price rises and price announcments
In November 2016, British Gas announced that it would freeze prices for standard rate customers for the winter season. The supplier promised to keep rates where they are until at least March 2017 (in early 2017 the supplier stated it would extend its price freeze until August 2017).
British Gas last announced a price rise in October 2013, when the company said it would raise prices by 9.2% on average, or about £123 more per year for the average customer. This would go into effect on 23 November 2013. (In 2014 and in 2015, the supplier announced three price cuts to its gas customers.)
https://www.uswitch.com/gas-electricity/suppliers/british-gas/#step1
We can ignore the self serving comment about how it’s time to switch supplier. This is how uSwitch make their money.
The salient point is that, prior to this new rise, British Gas have only increased electricity prices since Oct 2013 – an average on electricity and gas of 9.2%, and 12.5% last year. (Note they also cut gas prices three times in 2014 and 2015).
If we look again at those Environmental Levies, this year they are projected to add £10.4bn to energy bills (nearly all on electricity). Back in 2014/15, the cost was £3.6bn.
https://notalotofpeopleknowthat.wordpress.com/2016/03/19/environmental-levies/
So since 2014, electricity consumers have been forced to pay an additional £6.8bn, which equates to about 20% on their bills.
This pretty much covers British Gas’ price increases during that time.
To these costs, of course, we must add the cost of the smart meter rollout demanded by government, but paid for by the major energy suppliers. At an estimated £11bn up to 2020, this amounts to about £2bn a year, or 5%.
Whichever way you dice it, climate policies, enacted and agreed to with scarcely a murmur by all three major parties, are adding huge amounts to electricity bills, and have been the major cause of price rises in the last four years.
As the Helm Report recommended, these costs should be taken back from energy bills, and accounted for in government expenditure, where they belong.
But the chances of these are even less than Southend United winning the Treble next season. It’s much easier to put the blame on those greedy, rip-off energy companies.
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