British Gas will increase electricity prices by 12.5% from 15 September, its owner Centrica has said, in a move that will affect 3.1 million customers.
Gas prices are unchanged, but the average annual dual-fuel bill for a typical household on a standard tariff will rise by £76 to £1,120, up by 7.3%.
Centrica said the rise was a result of transmission and distribution costs and the costs of government policy.
But the government said its policy costs “could not explain” the rises.
Centrica said the price increase was its first since November 2013, adding that British Gas was one of the last suppliers to raise prices.
The company said it would protect its most “vulnerable customers” against the rise and that British Gas would credit more than 200,000 people on the government’s Warm Home Discount with £76.
Centrica chief executive Iain Conn told the BBC’s Today programme that wholesale costs had gone down and were not the reason for the price rise.
“We have seen our wholesale costs fall by about £36 on the typical bill since the beginning of 2014 and that is not the driver. It is transmission and distribution of electricity to the home and government policy costs that are driving our price increase.”
He added: “We are selling electricity at a loss and that is not sustainable.”
British Gas had frozen its gas and electricity prices for six months in February, saying at the time it was able to do so by cutting costs to offset higher wholesale prices.
A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “Energy firms should treat all their customers fairly and we’re concerned this price rise will hit many people already on poor value tariffs.
“Government policy costs make up a relatively small proportion of household energy bills and cannot explain these price rises.”
“In response to a letter from the Business and Energy Secretary asking what action the regulator intended to take to safeguard customers on the poorest value tariffs and the future of the standard variable tariff, Ofgem has committed to taking prompt action, in consultation with consumer experts, to develop proposals including a safeguard tariff.
“We want to see rapid progress on this commitment.”
Alex Neill of Which? magazine urged British Gas customers on the standard variable tariff deal to switch to another provider immediately.
“For the customers of British Gas, they won’t really care about any of this squabbling about who’s to blame for the costs or the price rises,” she said.
“At the end of the day, these people are now paying another £76 on top of what is already more than £1,000 a year for a bill. And they’re not really seeing the
(BBCNEWS)
