British Gas to hike prices again

British Gas customers should prepare for a rise in their electricity bills as the company reports that its profit margins have been squeezed to levels below ‘long run expectations’.

It would be the second price rise for British Gas customers in five months.  British Gas raised its prices in January this year in response to a hike in the cost of buying gas in the wholesale markets.  Despite losing 100,000 customers since this initial price rise, Centrica, the owner of British Gas, has announced it may have to take action in order to rebuild ‘reasonable margins’*. 

The 15 % price rise in January added £130 per year to the average British Gas energy bill in January.  Any further increase in prices may drive many of the 15.9 million British Gas customers, many of whom are already struggling with rising living costs and increased mortgage costs, to British Gas competitors if the further price rise goes ahead.

Low income households and the elderly are likely to be the worst affected by any further price rises.  According to a recent report by Age Concern, 5.5 million households, including all pensioners and families on basic benefits, could find themselves living in fuel poverty by the end of the year.  Fuel poverty is the term used to describe households where more than 10% of income is spent on keeping the home heated. 

Age Concern estimates that if energy tariffs continue to rise, without intervention from the government, by the end of the year ‘the average bill for 65-74 year-olds would soar to £1,262, a huge 19% of the income of a single pensioner on basic benefits and 12.5% of a couple’; and ‘families would have to pay a whopping average bill of £1340, 14% of the income of a lone-parent family and 12% for a couple family receiving basic benefits’.

Consumers who are worried about the impact a further energy price rise will have on their finances should utilise impartial energy comparison websites in order to find the most competitive tariff available in their area. 

TotallyMoney.com offers a free energy comparison and switch tool, allowing you to view the cheapest tariffs available and switch easily and safely. 

*timesonline.co.uk data

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