Losses spark British Gas price hike
Thursday, 27 July 2006British households face another rise in energy bills after British Gas said it would hike prices by as much as 12.4%.
The company's owner Centrica said its 10.7 million gas customers would be hit by a 12.4% increase on September 4 while its 5.8 million electricity customers face a rise of 9.4%.
The company blamed the soaring cost of the wholesale gas it buys to supply its customers which saw British Gas make record losses of £143m in the first half of 'its most difficult year'.
The losses at British Gas cut Centrica's overall pre-tax profits from £894m to £569m in the six months to June 30. Centrica said the cost of wholesale gas had soared 71% in the last 12 months, leaving it 'no alternative but to increase prices' for its British Gas customers.
It is the fourth big increase by British Gas in less than two years and follows a 22% hike in gas and electricity bills by the firm in March. The soaring cost of wholesale gas in the UK has been driven by growing reliance on imports.
Last month, outgoing Centrica boss Sir Roy Gardner branded the European energy market 'dysfunctional' and called for reform. The UK became a net importer of gas at the end of 2004 and now relies on 15% of its supplies from overseas. That is expected to rise to 50% by 2010 and 85% by 2020.
