British Gas Hits Customers with Highest Ever Price Increase

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.Increase will add £1.08 billion(2) to British Gas consumer gas bills .Energy giant has now raised gas prices by over 66% since start of 2004(3) .Average household energy bills for British Gas customers leap from £606(4)to £1005(5) since start of 2004 .Failure to switch energy providers could now cost customers £1.7 billion(6) .British Gas now 25% more expensive on average than competitors(7) .Gas bills increase by £113 and electricity bills by £71, leading to an increase in energy bills of £184(8)

British Gas has today announced a record price hike since privatisation - its fourth price rise since 2004(9), and its second in six months. It has increased gas prices by 22% and electricity prices by 22% for its customers(10). The increases will add £1.08 billion to UK domestic gas bills, taking the average household energy bill past the £1000 mark for the first time ever.

The announcement comes as no surprise as Centrica, British Gas’ parent company, had already stated(11) that its pricing policy for 2006 would be to pass on the full cost of wholesale increases to its customers. However, like all major energy suppliers, British Gas’ trading policy on the wholesale gas market should have insulated them from the worst of the effects of the drastic price increases seen this winter.

The continuing cost of loyalty for the average British Gas customer(12) is now a staggering £374(13). In spite of the fact that prior to this announcement the company had already raised its gas prices by 36%(14) since 2004, half of all UK households(15) still haven’t switched to another supplier, according to independent comparison and switching service uSwitch.com.

Alan Tattersall, Director of Home Services at uSwitch.com, comments:

“This is one of the biggest social scandals in recent memory. It is misleading for British Gas to hide behind wholesale gas prices as the reason for these latest increases. Even before this latest round of energy price rise announcements British Gas charged their customers on average 12.5%(16) more for gas than their main competitors. The volatility of the wholesale gas market affects all other gas and electricity suppliers, and yet British Gas is now 25%(17) more expensive than other suppliers’ standard tariffs, and 37%(17) more expensive than the average cheapest tariff."

“The alarming fact is that there are still over 11 million(18) gas customers who are prepared to pay the premium rates now being charged by British Gas. We would urge consumers to shop around for the best deals. By switching to cheaper suppliers for their gas and electricity, they could save up to £170(19) a year.”

For more information visit uSwitch.com or call 0800 093 06 07

Notes to editors:

(1)Highest British Gas price rise since liberalisation. This is based on increases for a medium usage gas customer (20,500 kWh of gas per year) on standard tariffs. The previous record price rise was 14.2% increase for gas and electricity announced on 9 September 2005.

(2)Number of British Gas residential gas customers stood at 11,362,000 as at 30 June 2005 (Source: Centrica interim report for the 6 months ending 30th June 2005). In Centrica’s Trading Statement dated 16th December 2005, British Gas announced that they expected to lose a net figure of 160,000 energy accounts. Assuming all 160,000 accounts lost were residential gas customers, this would leave the number of residential gas customers at 11,202,000 as at 31 December 2005. British Gas have 1,200,000 customers on their fixed product, who are excluded from price rises and hence from these calculations. Figure is worked out based on a medium usage gas customer (20,500 kWh) on British Gas’ standard tariff paying quarterly on receipt of bill.

(3)Based on a medium usage gas customer (20,500 kWh of gas per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions, since the start of 2004.

(4)Based on a medium usage customer (20,500 kWh for gas and 3,300 kWh for electricity) paying quarterly by cash or cheque, taking both gas and electricity from British Gas on 1st January 2004.

(5)Based on a medium usage customer (20,500 kWh for gas and 3,300 kWh for electricity) paying quarterly by cash or cheque, taking both gas and electricity from British Gas after price increase comes into affect.

(6)Average savings for customers who switch on uSwitch (£140) multiplied by the number of British households who haven’t yet switched (average of the 53% of the 21 million gas households and 49% of 26 million electricity households who have never switched).

(7)British Gas compared to standard products – this is based on a medium usage customer (20,500kWh for gas and 3,300kWh for electricity) with standard dual fuel paying quarterly by cash or cheque, taking standard tariff in each region, then taking the average across all regions.

(8)Based on a medium usage customer (20,500 kWh for gas and 3,300 kWh for electricity) paying quarterly by cash or cheque, taking both gas and electricity from British Gas after price increase comes into affect.

(9)British Gas have increased their prices for domestic customers four times since 1st January 2004;

·    10th January 2004

·    20th September 2004

·    19th September 2005

·    1st March 2006

(10)Percentage price rise taken from Centrica/British Gas press announcement on Friday 17th February 2006.

(11)Centrica Trading Statement – 16 December 2005

(12)A medium usage customer (20,500 kWh for gas and 3,300 kWh for electricity) taking both gas and electricity from British Gas and paying on the receipt of their bill.

(13)The saving that the average British Gas customer (defined above) could make by switching to the cheapest tariff in their region and changing their method of payment to monthly direct debit, averaged across all regions.

(14)Total gas price increases since 1st January 2004 for medium usage gas customers (20,500 kWh of gas) on British Gas’ standard plan paying quarterly by cash or cheque.

(15)Switching figures – according to Ofgem’s Domestic Competitive Market Review April 2004 - 47% of gas customers have switched supplier and 51% of electricity customers have switched.

(16)British Gas compared to average price (before 9 February 2006) of standard gas plans from EDF Energy, npower, ScottishPower, Scottish and Southern Energy and Powergen, based on a medium usage gas customer (20,500kWh of gas) paying on the receipt of their bill across all regions.

(17)British Gas compared to standard and cheapest products after implementation of announced price rises – this is based on a medium usage customer (20,500kWh for gas and 3,300kWh for electricity) with standard dual fuel paying quarterly by cash or cheque taking standard tariff in each region and the cheapest in each region then taking the average for each across all regions. For the comparison of British Gas against the other suppliers’ standard plans an average is take of EDF Energy, npower, Powergen and Scottish and Southern Energy and ScottishPower.

(18)Number of British Gas residential gas customers stood at 11,362,000 as at 30 June 2005 (Source: Centrica interim report for the 6 months ending 30th June 2005). In Centrica’s Trading Statement dated 16th December 2005, British Gas announced that they expected to lose a net figure of 160,000 energy accounts. Assuming all 160,000 accounts lost were residential gas customers, this would leave the number of residential gas customers at 11,202,000 as at 31 December 2005.

(19)£170 – at least 10% of uswitch.com customers make this saving.

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