The energy giant will raise its gas prices by 35 per cent and electricity by 9 per cent in order to deal with spiralling wholesale costs.
Centrica, the owner of British Gas blames the rises on “soaring wholesale energy prices” of over 90p/therm for gas in comparison with only 48p at the same time last year. It announced at the same time that its profits for the first half of the year were down by 69% to £166m.
The hike comes just after French-owned firm EDF Energy announced it would be raising gas prices by 22% and electricity prices by 17%, with other firms expected to follow suit over the coming weeks.
Consumer watchdog Energywatch has said that the 35% increase in gas prices is the largest single increase in the price of a utility seen to date.
The price of gas is rising due to the link between the cost of oil and gas, although oil prices have fallen in recent weeks. Energywatch described the link between the two as “absurd”. Britain’s increased reliance on imported gas, is also a major factor as North Sea reserves are running out.
Phil Bentley, managing director at British Gas, said: “We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.” “The simple fact, though, is that we have entered an era of unprecedented high world energy prices.”
“The only answer to cope with higher energy prices, I’m afraid, is for all of us to be more energy efficient and we will be contacting all our British Gas customers to show how they can save energy to try and offset these price rises.”
Back in May 2008 we reported that energy bills could hit record highs, followed in June by the imminent expected price rises, as well as advice on how to deal with rising energy prices.