Centrica Profit Drops, British Gas Lifts Electricity Prices

Posted August 02, 2017

British Gas and the UK Government have blamed each other for the rise, with Centrica, the firm that owns the energy company, saying that government policy has driven up prices - something the Tories deny.

Energy giant Centrica, which owns British Gas, said the average annual dual fuel bill for a typical household on a standard tariff will rise by £76 to £1,120 - an increase of 7.3%. Customers using a pre-payment meter will also not be affected. We know that keeping energy prices as low as possible is vital, and our new standard tariff price has again been set at a level lower than most of the top 10 suppliers.

"It is transmission and distribution of electricity to the home and government policy costs that are driving our price increase", said Centrica chief executive Iain Conn on BBC's Today Programme. Ofgem says that the costs of government obligations for energy rose 2.9% between January 2016 and January 2017.

Stephen Murray, energy expert at comparison website MoneySuperMarket, adds: "The summer months are a time when many people take their eye off their energy bills and there is a danger that millions of British Gas customers will miss this or shrug their shoulders in passive acceptance".

Alex Neill, of consumer group Which?, said: "Hard-pressed consumers waiting to see how the Government will tackle costly standard variable tariffs will be disappointed to see prices rising".

Handily, Ofgem breaks down that 15% cost increase into what has caused costs to rise.

His total remuneration package previous year was £1.9 million - although he could end up being paid as much as £4 million.

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Some industry analysts argue that falls in the wholesale price of gas and electricity should see cuts in energy bills rather than increases.

But Labour said it showed the Government had failed to rein in soaring energy bills, having already watered down its pre-election pledge to cap prices.

Will Hodson, co-founder of consumer collective The Big Deal, said it was the "ultimate slap in the face for families" and "unjustifiable".

"It is really important now that energy prices are stabilised and we need a cap to do that", he said.

News of the price hike came as Centrica reported British Gas adjusted operating profits tumbled 23% year-on-year in the first six months of 2017 to £489m. Instead the plan is to safeguard customers on the poorest value tariffs.

He commented: "We have made further significant strategic progress, continuing to reallocate resources away from our asset businesses towards our customer-facing businesses".

"As a former public utility, British Gas has a huge number of customers who don't switch, and is clearly treating these people like cash-cows".

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