Gas users face higher bills as wholesale prices double

Felicity Lawrence, consumer affairs correspondent Saturday February 10, 2001 The Guardian

Consumers face larger gas bills after British Gas yesterday announced price rises averaging 4.7% from April 1. Eastern Energy confirmed an average rise of 8%, while gas-only customers with NPower will see an increase of 4.5%.

Utility giant Centrica, which owns British Gas, said its in crease would mean an extra £14 on the average yearly bill for mains gas customers.

Wholesale gas prices are index-linked on the continent to oil prices and have more than doubled in the last year. British Gas, whose prices have been capped by the regulator Ofgem until April 1, said it has no choice but to pass on the rise to domestic customers.

Customers with prepayment metres, already charged a premium and among whom are some of the poorest users, will face a slightly lower rise of 4.4%, when Ofgem removes price controls in the spring.

There are 20m domestic gas customers in the UK but only 6m have switched to one of the 15 other suppliers since competition was introduced; the rest remain with British Gas. Many consumers who could get cheaper energy have been deterred from changing supplier by the complexity of pricing structures.

The Office of Fair Trading is conducting a preliminary investigation into whether there are problems with competition.

The recent surge in wholesale gas prices has rung alarm bells in the government.

On Thursday energy minister Peter Hain announced plans to investigate, together with the European commission, the possible anti-competitive impact on gas prices of the UK-Belgium pipeline, which links the UK market to the emerg ing European one. Energywatch, the gas watchdog, called on the government to investigate the "inexplicable price rises" in the wholesale gas market in the UK and for Ofgem to keep price controls.

An Ofgem spokesman said people should shop around. "Even if we had kept the price cap - there would have been an increase.

"British Gas customers should look at their bills and if they can't live with them, they've got 15 other suppliers to choose from. The chances are they will get a better deal."

Domestic gas prices have fallen by 24% since the start of competition.

The Consumer's Association expressed concern that prices were being driven up by the way UK gas is sold to Europe.

http://www.guardianunlimited.co.uk/uk_news/story/0,3604,436120,00.html

-- Martin Thompson (mthom1927@aol.com), February 09, 2001