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United Kingdom government criticizes utility's gas price hike

02 August 2017

Even though it plans to close it, Centrica wants to produce all recoverable gas from the Rough field, which is estimated at 183 bcf, a process which would take years.

It means the average annual dual fuel bill for a typical household on a standard tariff will rise by £76 to £1120 - an increase of 7.3%.

Such announcements are highly sensitive because they can affect share prices. If we assume that rate of increase was the same 2.9% a year from 2014 to 2017 that would have added no more than £10 to a bill, so we're still £79 short.

Centrica's chief executive, Ian Conn, who received a 40 per cent pay rise in 2016 taking the total to £4.15 million, recently hinted price rises were on the way and suggested the company's costs have risen.

The supplier - owned by the energy giant Centrica - said it had been forced into the "difficult decision" by rising costs and was its first for more than three years.

The news comes as Centrica posted profits before tax of £639m in the first half of the year.

Head of Research for consumer collective the Big Deal, Ed Molyneux, said the information on the British Gas website had let the cat out of the bag on a price rise.

A spokesperson for the Department for Business, Energy and Industrial Strategy said: "Energy firms should treat all their customers fairly and we're concerned this price rise will hit many people already on poor-value tariffs".

The British Gas CEO was Iain Conn's first major appointment.

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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.

British Gas owner Centrica claim the rise "reflects an underlying increase in policy and transmission costs".

"For example, British Gas managed to lose 377,000 United Kingdom customers in the first half of the year, despite waiting until after its rivals had increased prices before following suit".

The Government is facing fresh criticism for rowing back on its pledge to cap energy bills after British Gas became the latest supplier to announce a hefty price rise for millions of households.

Shadow energy minister Alan Whitehead said the government "should have acted on its pre-election promise of imposing a price cap on energy costs".

"On the face of it, it does not appear to be justifiable at all from where the market is going", he said.

Theresa May attacked Npower's planned 15% price hike as "shocking" earlier this year and announced plans for an energy price cap in May.

"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".

United Kingdom government criticizes utility's gas price hike