British Gas announces residential price rises
British Gas has announced that it is increasing both gas and electricity prices for residential users in response to rises in wholesale prices.From 20th September 2004 residential gas prices will rise by 12.4% and electricity prices will rise 9.4%. By comparison, wholesale gas prices are up an average of 28% on 2003, with forward prices for 2005 showing a further rise of 25% for 2005. Average wholesale prices for electricity in 2004 are 22% higher than 2003, with 2005 up by a further 28%, the company said.
The rises will mean an extra seven pence a day on electricity bills and 13 pence a day on gas bills for the average domestic customer.
"The UK energy industry has never faced such high wholesale gas 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," said Mark Clare, British Gas Managing Director.
Mr Clare blamed the depletion of the North and Irish Sea reserves and the UK's consequent need to import larger volumes of gas, along with the high price of oil for driving up the wholesale price of gas.
"The era of cheap UK energy is over," he said, "but we have confidence that the investments we are now making in future energy supplies will, in the long term, put downward pressure on commodity costs for the benefit of all our customers."
Centrica, the parent company of British Gas, has announced its intention to spend £4 billion on securing new sources of gas and electricity for its British Gas customers.
In response to these power price rises, Powergen has announced that it is capping price rises for the next two years for any new customer that switches from an alternative supplier.
By David Hopkins