British Gas price rise

Switching on your gas fire is getting more expensive

Millions of UK gas customers will have to adjust their budget, to account for gas bills rising far above the rate of inflation.

Centrica, the company that trades under the British Gas brand and supplies 14 million UK households, is to raise its gas prices by 4.7% on 1 April.

The new prices will add an extra £14 to an average gas bill of £295.

British Gas blames the sharply higher cost of wholesale gas - which has more than doubled over the past year - for the rise in domestic prices.

But critics note that the driving force behind the painstakingly difficult process of liberalising the UK's gas market was to push consumer prices lower.

Rivals follow suit

Some of British Gas' rivals such as Eastern Electricity and Seeboard have already raised their gas prices.

Changes to your bill

+4.9% gas bill paid by direct debit

+4.8% gas bill paid promptly

+4.4% gas bill paid in advance

-3.8% electricity bill paid by direct debit

-3.6% electricity bill paid in advance

The majority of the other gas companies are likely to follow the lead of British Gas.

Gas companies have been reluctant to put prices up ahead of British Gas for fear of losing market share, but will now be eager to do so.

And energy regulator Ofgem has only just allowed British Gas the freedom to adjust its gas charges.

Ofgem first took control of British Gas' charges because they wanted to make sure that there was enough room for new market entrants to come into the market and undercut prices.

So it is ironic that bills will be raised the moment that price controls are removed.

Good news...

But there is some good news for customers.

Regulator Callum McCarthy has voiced suspicions of manipulation

Firstly, some analysts had thought that British Gas would increase gas bills even more, with its French equivalent, Gaz de France, having already opted to push up domestic gas prices by 10%.

Secondly, those customers who also buy electricity from British Gas under the joint marketing agreement, will see that part of their bill declining by 3.7%.

British gas supplies four million customers with electricity.

The savings amount to about £9 a year.

... bad news

But the bad news is that the rise in gas bills may be due to nothing more fundamental than price manipulation by some gas producers.

Gas companies are currently under investigation from the Department of Trade and Industry, the Office of Fair Trading and the European Commission, all of which suspect foul play.

And energy regulator Callum McCarthy has already voiced his opinion that the recent price patterns in the wholesale gas market are suspicious.