Huge rise in British Gas fuel bills

British GasAnother 7.8 million households face surging winter energy bills after British Gas announced it will hike electricity bills by 10.4% and gas tariffs by 8.4% in the latest blow to family finances.

The group is the second of the "big six" providers to announce price increases this month after SSE recently revealed more than seven million customers will be hit with an 8.2% rise from November 15.

The move sees British Gas tear up a pledge made earlier this year to use an annual earnings windfall from the cold weather to keep a lid on tariffs.

Prime Minister David Cameron branded the announcement "disappointing" and urged unhappy consumers to switch suppliers for the best deal.
Rising energy bills will heap further pressure on the coalition Government ahead of the 2015 general election following Labour leader Ed Miliband's bold announcement last month that the party would freeze gas and electricity prices for 20 months if it was voted into power.

According to Ofgem usage figures, British Gas dual-fuel customers will see their average annual bill rise by £123 to £1,444 after the price increases, which take effect on November 23.

But regional variations in prices mean some customers will see their bills top £1,500 a year, with average prices rising by as much as 11.2% for some Scottish customers, while those in London will suffer a 10.6% increase and households in Yorkshire will have a 10.5% lift.

British Gas also said it was introducing a new fixed standard charge of 26p a day - which will have an impact on another 6.1 million customers - and a single variable unit rate, depending on usage and tariff.

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Consumer groups warned that other providers would follow suit with more price rises, leaving some households to choose between "heating and eating".

Martin Lewis of said: "This price hike round is big, and is nasty.

"It also means that two of the big six sheep have bleated, the rest are likely to follow within the next six weeks, leaving millions more homes already under the cosh having to choose between heating and eating."

Mr Cameron insisted the Government was doing what it could to try to keep costs down and get new suppliers into the market to increase competition.

He told BBC Sussex radio: "We are intervening because we are legislating to say these companies have to put their customers on to the lowest tariff.

"But there is something everyone can do, which is look to switch their electricity or gas bill from one supplier to another."

Mr Lewis warned consumers not to switch until all the suppliers had announced their price increases, but said customers should consider moving to a fixed-rate tariff before cheap deals close.

British Gas hiked tariffs by 6% last November ahead of a bitterly cold period when gas consumption rose 18% in the first four months of this year compared to 2012 - helping earnings at its residential arm to rise 3.2% to £356 million for the first half of the year.

The company said in May that because of the economic pressures facing many customers, the board had decided that any benefit from the exceptionally cold weather would be used to maintain ''price competitiveness''.

But it blamed the latest hike on the increasing cost of wholesale energy prices, Government energy initiatives and higher network charges for delivering power to customers' homes.

Ian Peters, managing director of British Gas Residential Energy, said: "We haven't taken this decision lightly, but what's pushing up energy prices at the moment are costs that are not all directly under our control, such as the global price of energy, charges that we have to pay for using the national grid that delivers energy to the home, and the cost of the Government's social and environmental programmes."

British Gas said the Government's energy company obligation (ECO) to help insulate homes will add £40 to average dual fuel bills in 2014, with another £10 on top from the cost of other environmental charges.

But Energy Secretary Mr Davey called into question its ECO cost claims.

He said: "I recently wrote to energy companies asking them to publish their costs of delivering the energy company obligation.

"Today's announcement shows why that's necessary, because British Gas's ECO numbers just don't add up when you look at what other energy companies are saying about their costs."

Mr Miliband said the increase showed there was "a real urgency" now for action.

During a visit to Peckham, south London, he told Channel 5 News political editor Andy Bell: "Week in, week out we see higher prices from these companies causing damage to families and businesses and frankly we have got a Prime Minister who is too weak to act.

"He is standing up for the energy companies not the consumer."

Mr Miliband said Mr Cameron was "weak when it comes to standing up to the strong".

He added: "The reality is that they are overcharging people in a market in a market that's not working and has broken."

Greenpeace policy director Doug Parr said: "British Gas's price rise is a yet another reminder that we should give up hope that the big six and levies on bills will deliver the energy savings needed to help the fuel poor.

"Rather, the Government should immediately instigate a massive programme of home insulation and efficiency, funded by revenues from carbon pricing.

"The UK has the worst domestic housing in Europe and the quicker we move on from divisive and misleading political wrangles over green levies to actually tackle the root of the rising bills problem, the better for everyone - except the energy companies, of course."

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