Osborne urges energy price cut

Chancellor George Osborne has told ITV News that energy companies npower and British Gas should reconsider their price hikes. The comments came after energy supplier npower followed British Gas in raising its prices.

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British Gas set to announce energy prices hike

British Gas, the country's biggest energy provider, is expected to announce a price rise today that could add an extra £100 a year to household bills.

British Gas is the biggest provider of energy to households in the country. Credit: : PA Wire

It is expected to be close to the nine percent increase that has already been announced by its rival Scottish & Southern Energy that will come into force on Monday.

Why energy costs keep rising

Utility providers blame wholesale gas prices (the cost of gas to the supplier), Government policy, the cost of using the National Grid and their investment in infrastructure for their tariff hikes.

Wholesale gas prices

  • Energy watchdog Ofgem says more than half of domestic bills are made up of wholesale costs
  • Wholesale prices are linked to changes in oil price, both are rising due to strong demand and tight supply
  • Domestic British suppliers are supplying less, meaning increased reliance on pricier imports

Government policy

  • Gas and electricity supplier SSE say the mandatory environmental and social initatives such as the Carbon Emissions Reduction Target and the Warm Homes Discount have risen by 30% in the past year
  • SSE says these account for 10% of a typical bill

National Grid costs

  • The cost of using the National Grid networks, which represents around 25% of a typical bill, is 9% higher than last year, according to SSE

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Labour demands transparency on energy costs

People will not understand why British Gas are putting prices up, despite their interim financial report showing profits on UK residential customers being up by 23 per cent, compared to the same period last year.

Hard-pressed families and businesses need much more transparency on costs, pricing and profits to know whether they're getting a fair deal, but the Government's Energy Bill does nothing to reform the energy market.

We need a One Nation government to break the dominance of the energy giants, to simplify tariffs, and to protect vulnerable customers from being ripped off.

– Caroline Flint MP, Labour’s Shadow Energy and Climate Change Secretary
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