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Last Updated: Saturday, 18 February 2006, 15:40 GMT
Gas rise sparks poverty warning
Gas pipeline
British Gas said European market practices contributed to price rises
A 22% price rise by British Gas could lead to 200,000 people moving into "fuel poverty," industry watchdog Energywatch has warned.

It said it would take the average annual energy bill to more than 1,000.

Energy minister Malcolm Wicks said he was "not happy" that frail people could suffer from the cold if unable to pay.

British Gas has said wholesale gas prices and a lack of competition in European markets contributed to the increase, starting on 1 March.

The government has a target to eliminate "fuel poverty".

People fall into that category if they spend more than 10% of their income keeping the house reasonably warm.

Even after these increases, British Gas continues to shoulder a portion of the burden these higher wholesale costs
British Gas

Mr Wicks told BBC Radio 4's Today programme: "Obviously I'm not happy and I'm not happy that the other companies have also increased their prices.

"How can I be happy when we're talking about frail people who could go cold in the winter and we've got to protect them?

"But I don't think pointing the finger at British Gas or any other company and saying, 'you're at fault, lower your prices' is the answer."

Mr Wicks said the government's energy review needed to look "at storage, about our capacity and whether we should be wary of importing so much in the future".

On Thursday, the European Commission said some European energy firms were holding back gas supplies, driving up prices of imports into the UK.

Energywatch expressed concern that the market was "not working".

Market concerns

Spokesman Alan Asher said: "The price rise is justified in far as Centrica [owner of British Gas] are concerned, but the market doesn't work and it's unjustified in terms of demand and supply.

"There are just a small handful of producers who control the shipping, the storage, and supply of gas to the UK and the market is failing."

British Gas is the UK's biggest energy supplier, with 55% of the gas market and 23% of the electricity market.

Its prices for gas and electricity will rise from 1 March 2006.

The firm blamed the increase on substantial rises in wholesale prices, up more than 70% since September.

British Gas said a main cause of the increases were anti-competitive practices in Europe, where gas and power markets have been slower to liberalise than in the UK and many of the largest companies are still state-owned.

But it also said that UK consumers still pay substantially less than their peers in Germany, France and Italy.

"Even after these increases, British Gas continues to shoulder a portion of the burden of these higher wholesale costs," it said.

This is a comparison between the latest prices of standard products.
There are cheaper products available, especially for online customers or for people who pay by monthly direct debit.
Calculations are based on 20,500 kilowatt hours usage, which is roughly the consumption of a household of four in a three-bedroom, semi-detached house.

Customers react to the gas price increases

British Gas raises prices by 22%
17 Feb 06 |  Business
Hain's SOS on rising energy costs
17 Feb 06 |  North East Wales
Centrica warns gas bills to rise
16 Dec 05 |  Business
Energy firms 'holding back gas'
16 Feb 06 |  Business
Power prices rise at EDF Energy
15 Feb 06 |  Business

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