British Gas hike prices by 12.5%

British Gas – the biggest energy supplier in the country – has become the latest to announce a considerable rise in prices, following an accidental leak on their website. The cost of its electricity will go up by 12.5% as of September.

This change has not come as a surprise – NPower did the same at the start of year, and it was always expected that the rest of the Big Six would follow suit. However, there’s been no real explanation as to why it is necessary, or fair to consumers.

Why have energy prices risen?

The reasons given for the price hike by Centrica (the owner of British Gas) are pretty vague. It has blamed “transmission and distribution costs” and the costs of “government policy”, whatever those are… The government and energy experts have been quick to voice their belief that the raised prices are not justified. When pushed, Centrica’s Chief Executive admitted that wholesale costs have dropped, and are therefore not the reason for the price hike; he said ‘It is transmission and distribution of electricity to the home and government policy costs that are driving our price increase.” It’s unclear what these ‘government policy costs’ are!

British Gas are eager to say their profits have dropped, and that they are selling electricity ‘at a loss’, yet it found the money to give its Chief Executive got a healthy pay rise of around £1million last year.

Who will be affected?

Due to a culture of misplaced loyalty to energy companies in the UK,  around two-thirds of bill payers are still on the worst-value standard tariffs. 3.1million people are currently on the British Gas tariff affected. The tariffs offered by the Big Six are normally the expensive option, but consumers are often swayed by a familiar name, or under the impression that in staying with the same supplier for years, they will be getting a good deal. If you’re with one of the big energy companies, now is a good time to shop around for a better deal! Time of use tariffs – expected to become widely available over the next few years – will offer cheap off-peak rates to undercut increasingly high energy costs, but the days of single-rate energy tariffs offering value for money seem to be numbered.


The only people safeguarded from the price rise are the 200,000 people eligible for Warm Home Discount payments. Those on the scheme will get a payment to offset the increase in bills owing to the price rise this year. It’s not clear whether this will continue in future years, and those eligible for this payment are only a small section of the 10-20% of British households estimated to be ‘fuel-poor’.12.5% is a considerable increase, and it’s enough to cause problems for many households already on the poverty line.

Will energy prices continue to rise?

With energy prices rising, and energy poverty at all all-time high in the UK, there is growing pressure on Ofgem and the government to introduce regulation. Where is the energy price cap we were promised in the Conservative party manifesto? This seems to have been conveniently forgotten, and it’s no coincidence that the energy companies are hiking up prices while they still can.

We wait to see if the government will act – or if the changes to national energy management they announced just last week will have any impact on prices in future.

How can I save energy?

Saving energy is becoming increasingly important, so why not take the opportunity to check out some of our energy saving tips? There are loads of quick, cheap and easy changes you can make -one of the most worthwhile is to switch to LED bulbs, which use 90% less energy than traditional bulbs.

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