British Gas increases gas prices 35%

British Gas owner Centrica is hiking gas prices by 35 per cent and electricity prices by nine per cent.

Dual fuel prices will rise 25 per cent – or £5.04 a week - and prepayment customers will see prices rise 21 per cent.

Centrica has blamed the hikes on the rise in wholesale gas and electricity prices of 89 per cent and 72 per cent respectively since last winter.

Figures from uSwitch show annual gas prices will rise £230 and electiricty pries will go up £37.

The average household bill for a dual fuel British Gas customer was £912 on January 1st 2008, £1,055 before this latest increase, and will go up to £1,322 from today.

British Gas managing director Phil Bentley said: "We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.

"The simple fact though, is that we have entered an era of unprecedented high world energy prices. The only answer to cope with higher energy prices, I’m afraid, is for all of us to be more energy efficient."

Adam Scorer, energywatch director of campaigns, said: "The fact that
British Gas has trailed this announcement so heavily will not make an
ounce of difference to the impact of this massive price hike.

"It's the consumer's bottom line that matters to us, not Centrica's. But
at a time when suppliers have been complaining about higher costs and
difficult times, customers may be looking with some interest at the
Centrica profit statement tomorrow morning."

Energywatch, the independent gas and electricity watchdog, explained the price rises are primarily driven by an "irrational and toxic" link between the price of gas and the
price of oil.

"Just because decoupling that link may be complex and not certain to succeed quickly, is no excuse for not trying," Mr Scorer said.

"It is now an absolute imperative that government directs the European competition authorities to explore ever avenue that might return some sanity to the gas price."

Centrica, however, is launching a new Essentials Extra service for vulnerable customers with no price increases until April 2009. The firm will also spend £900 million over the next three years installing energy efficient products in customers’ homes.

British Gas is today introducing a new fixed priced tariff until September 2011 without a premium.