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British Gas Next to Raise Prices, Brown Lends His Voice
(08-01-08) - Industry murmurs that British Gas is set to follow npower’s price hike trend has forced the Prime Minister, Gordon Brown, to express concern about escalating energy prices.
Centrica, the parent company of British Gas, has forecast sharp rate rises in 2008 if the upward trend of wholesale prices does not abate. Leading energy sector analyst Thierry Bros of Société Générale predicts a ‘10% rise in gas prices, and a 4.5% increase in electricity prices’ from British Gas, which will trigger similar increases from other companies who take their cue from Britain’s biggest gas supplier.
The move follows npower’s surprise announcement last week of 17% and 13% rises in gas and electricity prices respectively, which they blamed on the current $100 a barrel price of crude oil and a 7.6% increase in wholesale costs. Supplies are generally bought a year in advance by energy companies though, and last year wholesale prices were at their lowest level since 2004.
Echoing Alistair Darling’s comments, the Prime Minister, Gordon Brown, has publicly expressed his concern over the impact these price rises will have on the economy.
A spokesman for Brown said:
‘The UK has a competitive energy market generally but government ministers are concerned about the effects of price rises on business and vulnerable customers.'
Over Christmas, in the traditional precursor to a period of price rises, several suppliers discreetly withdrew tariffs that allowed customers to fix prices several months ahead. Scottish & Southern withdrew its cheapest online tariff, which fixed prices until November, and E.on pulled an offer to set prices until January 2009
Chris Eagle, Commercial Manager at EnergyChoices.co.uk, expects all suppliers to fall in line behind British Gas:
'Once British Gas increases rates, everyone will follow, so it won't be long before your supplier has bumped up your bills. It's still a little early to predict who will be the cheapest supplier to go with in 2008, so hold off for a few weeks until the dust settles, then re-assess your current deal and evaluate whether it still represents good value.'
