British Gas has confirmed that from 18th August this year they will be increasing the price of their domestic gas and electricity.
The company, which is owned by Centrica, has indicated that on average, gas bills will increase by approximately 18% and electricity will go up by approximately 16%.
The Scottish Power company have also confirmed that their prices are going to increase in August, with gas prices going up by 19% and electricity going up by 10%. More energy companies are also expected to announce similar increases to their fuel prices.
Approximately nine million UK households will be affected by the increase to their fuel bills. The average dual fuel customer is now facing an estimated £190 increase to their annual bill.
The wholesale cost of gas on the international market has increased by over 30% since last winter. British gas have confirmed that 50% of the gas which they supply comes from the wholesale market and this is the reason why they have had to increase the price of their fuel.
The rise in the wholesale cost of Gas is a problem which faces every supplier, and Centrica had previously confirmed that they would have to increase their domestic prices. In May they had indicated that the increase to the wholesale cost of gas in the first half of the year will depress their profit margin and that prices would have to increase in order make up for the loss.
Mike O’Connor, the chief executive of Consumer Focus, has rejected this argument. He stated that whilst wholesale prices have gone up, they are still below the price levels in 2008.
However, the cost of gas to the British Gas customer is now 44% higher than it was in 2008 and furthermore, the cost of electricity has gone up by 21% in this time.
The price comparison service Uswitch has confirmed that average household bill for a dual fuel British Gas customer was at £1,096 per year last year. Customers have already had a 7% rise in their energy bills prices when British Gas announced an increase last December. The latest increase will mean that customers have sustained a 25% increase from last years energy bill to an estimated £1,288 per year.
Richard Lloyd of the consumer association Which? believes this new increase to be an unwelcome move, particularly as many people are already having to make cutbacks due to the rising cost of living. He went on to suggest that these increases could lead to a cold winter for many people this year as they will be forced to make further cutbacks.
Chris Huhne, the Energy and Climate Change Secretary, has suggested that these increases only add to the need to move away from natural gas and fossil fuels as a source of electricity and confirmed that the UK market needs to change. He added: “Alternatives like renewables and nuclear power must be allowed to become the dominant component of our energy mix.”
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