British Gas to hike prices next month

Centrica, which trades under the British Gas brand, is to hike domestic gas and electricity prices in November.

Britain's biggest energy supplier has begun notifying its customers that it will raise domestic gas and electricity prices by an average of 6% on November 16th.

According to British Gas, this means that the annual dual fuel bill for its domestic customers will increase by around £80.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

While acknowledging that the price rises would be unwelcome news for customers, the supplier is facing rising wholesale prices, as well as higher costs to upgrade the national grid, and is also obliged to deliver the government's policies for a clean, energy-efficient Britain.

British Gas Residential profits in the second half of 2012 are expected to be around 15% lower than for the same period of 2011, British Gas said. Centrica's adjusted earnings last year totalled £1.33bn.

"We simply cannot ignore the rising costs that are largely outside our control, but which make up most of the bill," said British Gas Managing Director, Phil Bentley. Around 85% of costs behind the average dual fuel bill are largely beyond the control of British Gas, the firm claimed.

"Britain's North Sea gas supplies are running out, and British Gas has to pay the going rate for gas in a competitive global marketplace. Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers' homes, and the costs of the Government's policies for a clean, energy efficient Britain are all going up," he continued.

Bentley claimed "rising prices don't have to mean rising bills" as he highlighted a number of energy saving initiatives the group is offering free to customers.

JH