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Last Updated: Friday, 9 September 2005, 16:34 GMT 17:34 UK
Scottish Gas prices to increase
The increase will affect hundreds of thousands of customers
Scottish Gas has announced that it is to increase prices by 14.2%.

The hike, a year after the energy company's prices went up by 12.4%, is being blamed on soaring oil prices and declining North Sea reserves.

The increase, which was announced on Friday, will take effect on 19 September.

An Energywatch spokesman said the wage rise for the average person was "nowhere near" the latest increase and that reform of the market was needed.

The 75,000 customers who signed up to Scottish Gas' price protection, which caps energy prices, will not be affected by the rise until April 2007.

The company, which is owned by Centrica, said it was not fully passing the higher wholesale fuel costs on to customers, but was instead trying to mitigate the impact by driving down company operating costs.

It is also offering support to 40,000 of its most vulnerable customers through a rebate of up to 60.

Spiralling world oil prices are having an unprecedented impact on the cost of gas
Jim Needham
Scottish Gas

Jim Needham, director of Scottish Gas, said: "Scottish Gas has a record second to none in our commitment to protecting vulnerable customers.

"We are continuing to deliver on that commitment through our new winter rebate scheme - the biggest social initiative carried out by a Scottish energy company - in what is an extremely difficult commercial situation.

"Spiralling world oil prices are having an unprecedented impact on the cost of gas."

He said the company had a number of other schemes to help vulnerable people.

"It is now more important than ever that our customers take action to save energy and so reduce their bills," he said.

'Energy island'

"As a company, we already invest 130m a year in energy efficiency measures for customers, and we will now offer additional incentives for those that are prepared to take action."

The current forward price of gas for the second half of 2005 is 50% above the same period in 2004, and 31% above the market price for the first half of 2005.

For electricity, it is 61% and 43% higher respectively.

Mr Needham added: "The UK is no longer an energy island and is greatly exposed to inefficiencies in European markets.

Sadly, there are no short-term fixes for the European wholesale gas market
Graham Kerr

"The reluctance of some member states to open up their energy markets to competition is to the detriment of Scots consumers, and in particular the most vulnerable customers."

Energywatch spokesman Graham Kerr said: "There are no winners. Suppliers are paying over the odds for energy but they are passing the full burden on to consumers.

"The wage rise for the average person comes nowhere near the latest increase."

He added: "Scottish Gas have repeated the explanation for price rises as lying at the door of the European gas market. Sadly, there are no short-term fixes for the European wholesale gas market.

"What we need is a meaningful reform agenda from the market which gets to the root cause of why UK consumer pay grossly inflated prices for energy."

Scottish National Party energy spokesman Richard Lochhead said: "This latest rise is a hammer blow for British Gas customers.

"While British Gas offer rebate to some customers, this will not affect the majority and will not help low-income customers in the long term.

"UK Chancellor Gordon Brown can't be allowed to get away with sitting on his hands raking in billions of pounds in extra oil and gas revenues and at the same time, leaving Scottish households and businesses in the lurch."

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