planned oil shock: British Gas raises prices by 22%

2006-02-18

Richard Moore

     On Thursday, the European Commission said some European
     energy firms were holding back gas supplies, driving up
     prices of imports into the UK...

As expected.

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http://news.bbc.co.uk/1/hi/business/4723648.stm


British Gas raises prices by 22%

Millions of British Gas customers are facing higher bills
after the firm raised its gas and electricity prices.

The UK's biggest energy supplier will raise gas and
electricity tariffs by 22% from 1 March 2006.

The firm blamed the increase on substantial rises in
wholesale prices, up more than 70% since September.

On Thursday, the European Commission said some European
energy firms were holding back gas supplies, driving up
prices of imports into the UK. In the past few days, both
EDF Energy and Scottish Power also have raised their prices.

News of British Gas's move prompted consumer groups to voice
concerns about the effects of the increases.

Bleak day

Energywatch called it the bleakest day yet for energy
consumers in Britain, while Age Concern said older people
needed extra protection from fuel poverty. "An extra 200,000
older people are pushed into fuel poverty when a 10%
increase occurs, so this particular price rise will have a
wide effect on vulnerable pensioners," said Mervyn Kohler, a
spokesman for Help the Aged.


Even after these increases, British Gas continues to
shoulder a portion of the burden these higher wholesale
costs

British Gas

British Gas defended its decision to boost prices, saying
that UK consumers still pay substantially less than their
peers in Germany, France and Italy. "Even after these
increases, British Gas continues to shoulder a portion of
the burden of these higher wholesale costs," it explained.
It also said it would provide a 'Winter Rebate' of £90 to
300,000 of its most vulnerable customers.

British Gas said that wholesale gas prices are 63% higher
this year than they were in 2005, and more than triple their
2003 levels. Wholesale prices in the UK are now the highest
in Europe, the company added. Market distortions

British Gas said a main cause of the increases were
anti-competitive practices in Europe, where gas and power
markets have been slower to liberalise than in the UK and
many of the largest companies are still state-owned.

Earlier this month, British Gas-owner Centrica estimated
that UK consumers have paid an extra £300m for gas this
winter because of problems with the European gas supply
system.

The problems prompted the group to warn in December, just
months after raising prices by 14%, that tariffs would have
to rise once more. Centrica said a lack of competition had
made it difficult to get enough gas to meet demand at peak
times.

Its British Gas has a 55% share of the gas market and 23% of
electricity. It has eleven million gas accounts and six
million electric.

The supply and pricing problems have become so acute that
the European Union has launched an investigation into the
gas and electricity sectors in an effort to crackdown on
anti-competitive behaviour.

Without naming companies, EU competition boss Neelie Kroes
said on Thursday that a number of firms now faced separate
probes.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4723648.stm

Published: 2006/02/17 15:28:28 GMT

© BBC MMVI
-- 

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