uSwitch News

Monday 31st July 2006

British Gas to put up Gas prices!

56%¹ (or £403) IN 12 MONTHS…

… that's how much British Gas has raised energy prices for its customers, reveals uSwitch.com

• Increases add £78 (12.4%) to gas bills and £37 (9.4%) to electricity bills² from 4^th September 2006
• Average annual bill size for British Gas customers now stands at £1120³
• Increase will add £884 million⁴ to British Gas customers’ bills
• Third price rise in 12 months and fifth since the beginning of 2004⁵
• Average gas bill has nearly doubled from £372 to £707⁶ in 4 years
• British Gas now 22% more expensive on average than competitors⁷

Mark Clare (Managing Director, British Gas): “While there can be no guarantees in such a volatile wholesale market, we see no need for any further price rises this year...” 17^th February 2006⁸

Amanda Mackenzie (Brand Director, British Gas): “Our record… is that we put our price up once in the year and that’s it, whereas our competitors go twice. So you never know when the next price rise is going to be.” 28^th February 2006⁹

British Gas customers have just found out when their next price rise is going to be - and it’s not 2007 - as the company today announced its third price rise in the space of a year. It has increased gas prices by 57% and electricity prices by 52% during this time, taking their average annual energy bill from £717 to £1120¹⁰.

Ann Robinson, Director of Consumer Policy at uSwitch.com, comments: “The public assurances given earlier in the year by British Gas following their record price rises in February have been rendered meaningless to their customers today, as they face further price rise misery in what has become the ‘annus horribilis’ for UK households.

It seems that in spite of raising gas and electricity prices by a record 22% only 5 months ago, and leading customers to believe that they would be safe from further increases until 2007, British Gas underestimated the profits this move would deliver to their shareholders¹¹, so they are once again looking to their customers to make up the shortfall. The company revealed in its annual results today that it has lost £143 million for the first six months of the year¹², although the £884 million that will be generated by this price rise should more than make up the difference.”

“Whilst British Gas continues to hide behind rising wholesale gas prices, this still doesn’t explain why they remain £213¹³ more expensive than the cheapest supplier in the market place and £204¹⁴ more expensive on average than the other major suppliers. It is quite clear that the interests of British Gas customers come a poor second to the interests of the company’s shareholders.

Energy prices this year have now risen by 29%¹⁵ on average, and much has been made by British Gas in particular of the benefits to consumers of signing up to its long-term fixed price product.”

Robinson continues: “Fixed and capped-price products are certainly worth considering if a consumer wants the security of knowing that they will be insulated from further price rises over a fixed period, and don’t mind paying a premium for this security. However, prices for these products have varied between suppliers by at least 5% or £46¹⁵ in the past, so consumers who are considering this type of product shouldn’t just sign up to the first one that is offered to them by their provider”.

“For those who want to ensure that they are on the cheapest tariff, online deals represent the best value, as they are consistently cheaper than standard offline tariffs, although prices can vary significantly between providers. Even in the current climate of endless price rises, there are still significant savings to be made by consumers if they are willing to shop around, especially for the 10 million¹⁷ households who have never switched supplier.”

Robinson concludes: “Energy is no longer a commodity that we can take for granted and everyone needs to start thinking about how much energy they use, and start using it more effectively. We all need to become more energy efficient, and the money people can save by switching to a cheaper energy supplier can be spent on energy efficiency measures elsewhere in the home.”

The British Gas Premium

uSwitch.com has developed the ‘British Gas Premium’¹⁸, which tracks how much more expensive on average British Gas products are when compared to similar products offered by other suppliers.

For more information visit uSwitch

Notes:

^1. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions, since 19^th September

^2. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions.

^3. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions.

^4. According to Centrica’s 2005 preliminary results British Gas have 11,131,000 gas customers and 5,920,000. According to Centrica’s 2006 AGM statement British Gas have 2,500,000 fixed rate accounts, we assume that these are distributed between gas and electricity in the same proportions as the total British Gas customer accounts. Therefore 1,632,000 gas and 868,000 electricity customers will not be affected by today’s increase. Based on a medium usage (20,500 kWhs of gas and 3,300 kWhs of electricity) customer on British Gas’ standard tariff. Averaged across payment on receipt of bill and by fixed monthly direct debit, taking an average across all regions, gas bills will go up by £74 and electricity by £36. Therefore this increase will cost British Gas gas customers £702 million and British Gas electricity customers £182 million, this totals £884 million.

^5. British Gas have increased their prices for domestic customer five times since 1st January 2004:

• 10^th January 2004
• 20^th September 2004
• 19^th September 2005
• 1^st March 2006
• 4^th September 2006

^6. Based on a medium usage gas customer (20,500 kWh of gas per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions, since 1st January 2003

^7. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions. British Gas is compared to the average bill size for the remainder of the “Big 6” gas and electricity suppliers (EDF Energy, npower, Powergen, Scottish & Southern Energy and ScottishPower)

^8. Source: British Gas Statement on Energy Prices - 17^th February 2006

^9. Source: Amanada Mackenzie - Watchdog, BBC One - 28^th February 2006

^10. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions, since 19^th September 2006.

^11. Source: Centrica 2006 AGM Statement, 19^th May 2006

^12. Source: Centrica plc: British Gas Price Statement – 27^th July 2006

^13. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying monthly direct debit. Prices are averaged across all regions. British Gas is compared to the cheapest standard bill sized for each region, average across all regions from the remainder of the “Big 6” suppliers.

^14. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on British Gas standard plan, paying by cash or cheque on receipt of bill. Prices are averaged across all regions. British Gas is compared to the average bill size for the remainder of the “Big 6” gas and electricity suppliers (EDF Energy, npower, Powergen, Scottish & Southern Energy and ScottishPower)

^15. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year) on standard plans averaged across the “Big Six” gas and electricity suppliers, paying by cash or cheque on receipt of bill. Prices are averaged across all regions.

^16. Difference between cheapest and most expensive fixed or capped plans, when averaged across all regions. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year), paying by monthly direct debit. This is based on Fixed and Capped plans available in the market as of 26^th July 2006.

^17. Source: Ofgem press release – 6^th February 2006

^18. Difference between British Gas tariffs (as stated in the title of the table) compared to the cheapest tariff from the remaining “Big Six” suppliers, available in the market on 26^th July 2006. Based on a medium usage customer (20,500 kWh of gas and 3,300 kWh of electricity per year), paying by monthly direct debit, averaged across all regions.

For more information visit uSwitch