British Gas will provoke fury today by announcing an inflation-busting rise in energy bills – even though the price of power has fallen over the past year.
A dramatic increase of up to 9 per cent is expected, which would add more than £100 to the average family’s heating and power bill from next month.The rise will affect ten million households – more than 40 per cent of the country – and plunge more people into fuel poverty just as the winter months set in.Millions of families are already struggling to pay their energy bills amid the biggest squeeze on household incomes for more than 60 years.
The price rise will lead to renewed claims that energy giants are profiteering. An average dual-fuel bill for British Gas customers is already £1,260 and it could rise to £1,375, consumer groups warned last night. The firm’s parent company Centrica posted profits of £1.7billion in the first half of this year.But even though the price of buying electricity on the open market is 6 per cent lower than it was 12 months ago, the big six energy firms are all expected to hike their prices before Christmas.Caroline Flint, Labour’s energy spokesman, said people would not understand why bills had to rise when British Gas was making so much money.
‘Hard-pressed families and businesses need much more transparency on costs, pricing and profits to know whether they’re getting a fair deal,’ she said.‘Unless ministers get to grips with spiralling energy bills, people will rightly think that this Government is completely out of touch with families and pensioners struggling to make ends meet.’
Michelle Mitchell, of the charity Age UK, said: ‘Reports of price hikes as we head into winter will be leaving many older people feeling extremely anxious about their heating bills. Cold homes pose a serious risk to the health of older people, yet a huge number of older people cannot afford to heat them properly.’
Energy bills have doubled in the past decade and last year each of the big six hiked prices. British Gas pushed them up by 18 per cent for gas and 16 per cent for electricity.The firms blame the price hikes on the rising cost of imported gas on international markets. However wholesale energy prices are currently £51 per megawatt hour, compared with £54 per megawatt hour this time last year.In the first six months of the year Centrica posted a 23 per cent rise in operating profits for its domestic heating and power division, making £345million before tax. Energy firms hiking prices just before winter is a familiar story, with the prices falling once the cold months are over. The falls tend to be much smaller than the rises however.
Each of the big six – British Gas, EDF, Npower, E.ON, SSE and Scottish Power – is expected to increase rates either before or during winter.SSE is hiking tariffs by 9 per cent at the start of next week.Ann Robinson, director of consumer policy at uSwitch, said British Gas’s move was ‘devastating’: ‘This is an absolute body blow for consumers.‘Last winter 80 per cent of us rationed our energy usage, while 75 per cent switched it off entirely for periods during the winter. How much worse will it be this winter?’
Only E.ON has promised not to hike bills until after December 31.Energy firms are expected to blame rising costs on meeting environmental regulations laid down by the Government and the EU.Stephen Fitzpatrick, managing director of small electricity supplier OVO Energy, said industry regulator Ofgem had failed to get the market working better.