Friday December 14, 10:54 AM
British Gas rates set to rise
By Barney McCarthy
A trading statement by Centrica (LSE: CNA.L - news) , owner of British Gas, shows clear signs of price hikes in the New Year.
The statement highlights a reduction in profit margins in the second half of 2007 due to increased wholesale prices.
If this continues into 2008, the energy giant has hinted that a rise in household energy prices will be inevitable.
Tim Wolfenden, head of home services at uSwitch.com, said: This announcement is potentially bad news for 16 million British Gas customers, especially to those who switched back to the provider in 2007. There is an indication that shareholders, but not customers, are still its main priority.
Although Centrica predicts a more difficult environment for all retail energy suppliers in 2008, it is still making a profit, but is saying that it isnt enough. Wholesale prices are squeezing its profits and to ensure it maintains high target margins, it will have no choice but to pass on increased wholesale costs to customers. British Gas has already started paving the way for across the board prices rises by putting up the prices on its tracker plan.
uSwitch advises that for those customers who are worried or are particularly vulnerable to the impact of price rises, there are some good competitive fixed energy plans available, which may give the protection they need. It urges consumers to compare all plans and prices out there to make sure that they are on the one that really suits their needs.
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