Energy News

Bigger bills by the end of August

Tuesday 22 July, 2008

By becca.talbot@consumerchoices.co.uk

The price of household energy could increase by as much as 30% before summer ends, after reports suggest Centrica, owner of British Gas, will scrap the idea of raising prices gradually due to financial losses.

According to the Financial Mail on Sunday, British Gas is expected to raise the cost of energy usage by 30% over the coming weeks and it is likely other energy suppliers will follow suit.

Following a report from Centrica, customers were told that they should expect price hikes of up to 60% over the next few years, but now, amidst concerns that the energy giant is about to announce a sharp fall in profits for the six months to June, consumers fear that the rises will happen sooner rather than later.

The huge rise means that for Centrica’s 16 million customers, an average annual gas bill will be £800 alone, and with electric on top, each household could be facing around £1,300 worth of energy bills.

A final decision has not yet been made on the price increases, but indications suggest the board will make up their minds before the end of August, meaning energy bills could be upped before the cold months have even begun.

Energy Minister Malcolm Wicks is concerned about the prospect of huge energy bills, saying: “Protecting vulnerable people is an absolute priority. I am constantly talking to and working with energy companies to make sure they continue to offer social tariffs to help these people.”

As a result of the soaring energy costs, many industry officials fear that as many as six million households will be plunged into fuel poverty, where more than ten per cent of income is spent on energy bills.

Last week, speaking to Channel 4 News, Centrica Energy managing director Jake Ulrich warned that gas prices are expected to continue to climb “for some time,” and admitted that the price hike would probably lead to a “potentially significant” rise in the number of households in fuel poverty.

Chris Eagle of EnergyChoices.co.uk says: “Raising the prices so soon is going to leave many vulnerable consumers facing the risk of fuel poverty towards the end of the year. The Government needs to act now, or the fuel crisis could escalade.”

Chris recommends: “Switching to a capped tariff now is the best way to avoid the expensive bills later on. Capped price tariffs work by guaranteeing that the price you pay per unit won’t rise for a set amount of time - usually 12 months."

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