Energy News

Energy customers face 60% price hike

Friday 18 July, 2008

By becca.talbot@consumerchoices.co.uk

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Gas prices will rocket skywards this winter, and are predicted to carry on rising for the foreseeable future, a new energy report published today has revealed.

The independent report, commissioned by Centrica who own British Gas (www.britishgas.co.uk) warns that prices could rise by as much as 60%, meaning annual average gas bills will shoot up from £600 to more than £1,000 within the next few years because of continuing high oil prices.

According to the report from the UK’s biggest domestic energy supplier, the link between crude oil prices and wholesale gas prices in the UK will strengthen over the next few years as deteriorating output from the North Sea forces the country to be more dependant on imports.

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.

Speaking to Channel 4 news, he said: “I do think we will see people change their behaviour. I think people will use less energy and I hate to go back to the Jimmy Carter days in the US, maybe it’s two jumpers instead of one.”

“The Government is wrong to say that nothing can be done.”

He continued: “I think people will change the temperature they keep their house, they’ll be more cognisant of energy waste, they’ll buy better appliances.”

Centrica, which owns energy provider British Gas, says the UK will have to compete with other European countries for gas transported by pipeline, or bid for tanker loads of liquefied natural gas in international markets where prices are correlated with oil prices.

Gas and electricity watchdog Energywatch has called for the government to act on the report, to ensure the industry deliver affordable energy for Britain’s poorest consumers.

“The Government is right to say that the link to oil is a cause of the problems, but wrong to say there is nothing that can be done,” said Energywatch’s Chief Executive Allan Asher in the Guardian.

“The local impact is so catastrophic it should be leading the international drive to end the hugely damaging and entirely unjustifiable link between the prices of gas and oil.”

Chris Eagle of EnergyChoices.co.uk had this to say: “A price hike of this scale could be detrimental to the UK’s economy, leaving even more vulnerable consumers facing the risk of fuel poverty. The elderly will be particularly susceptible, as pension payouts will not be enough to accommodate the rise in energy costs. The government needs to act now to cut the price link between gas and oil.”

Chris continues: “Because the cost of gas and electricity does fluctuate, it can be very difficult to predict how things will stand in the next couple of years. An alternative way of helping you manage your energy costs is capped tariffs. Capped, or fixed price, tariffs work by guaranteeing that the price you pay per unit won’t rise for a set amount of time - usually two or four years. Now may be a good time to switch tariffs to ensure you don’t fall victim to the predicted raise in fuel prices.”