British Gas rises: "Inflation-busting hikes are back"

The news that British Gas is to raise its gas and electricity prices by 7% means “the spectre of inflation-busting energy price hikes is back with a bang”. And with […]

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By Kelvin Ross

The news that British Gas is to raise its gas and electricity prices by 7% means “the spectre of inflation-busting energy price hikes is back with a bang”.

And with Scottish and Southern Energy having already lifted prices and EDF announcing a bold tariff freeze, all eyes are now on the remainder of the ‘Big Six’ to see what they will do.

British Gas announced the price hike on Friday, when it tried to downplay the increases by saying they could be offset by more efficient use of energy.

But risk analyst at energy consultants Utilyx Andrew Horstead said: “The decision to raise bills is completely unjustified. The gas market is well supplied at the moment and we expect this to continue for months to come.

“Last year’s cold snap was a stern reminder of how dependent we are on gas to see us through the winter months but we are much better prepared for this year. Our storage levels are replenished and Norwegian production levels are expected to increase. The gas will come.”

Mr Horstead said the British Gas decision was “completely unwarranted” and added: “Consumers will be forced to bear the brunt of this decision at a time when few can afford such steep rises.”

And Datamonitor analyst David Mayne said that the recent decision by EDF to fix gas and electric prices for this winter may now been seen as one that has backfired.

“The winter period accounts for almost half of annual residential gas consumption, and wholesale prices tend to rise to reflect this increased demand,” he said. “Naturally, suppliers maintain margins by passing these costs through to consumers. This makes EDF Energy’s bold strategy of fixing gas and electricity prices through the winter period at current rates all the more ambitious, a decision which may cost them tens of millions of pounds, but will certainly win the appreciation of their customers.”

In October, Scottish and Southern Energy announced it would raise prices by 9.4% from December 1.

That leaves npower, E.ON and ScottishPower to play their hands on prices, and consumer watchdogs are getting jittery.

Ann Robinson, director of consumer policy at uSwitch.com, said: “The spectre of inflation-busting energy price hikes is back with a bang.

“After a two year lull, household energy prices are about to resume their steady climb upwards again. Unfortunately for consumers, the 8% or £99 reduction seen over the last two years failed miserably to reverse the impact of the 42% or £381 increase seen in 2008.

“And now, whatever small benefit was seen is about to be wiped back out again.”

Ms Robinson said “there is no room for complacency and urged consumers to “keep a lid on your energy bills: use less energy by making your home more energy efficient and move to a competitive energy plan so that you pay less for the energy you do use”.