British Gas Price Announcement

Centrica PLC
                  

8 December 2003

BRITISH GAS ANNOUNCES PRICE INCREASE - BUT DELAYS RISE FOR 2 1/2 MILLION
PRE-PAYMENT CUSTOMERS UNTIL AFTER WINTER

British Gas today announced that it is to increase domestic gas and electricity
prices by 5.9 per cent reflecting the underlying cost pressures facing all
energy suppliers.

The majority of customers will see the price rise take effect from 10 January
2004. However, the increase to 2 1/2 million pre-payment customers will be held
back until 1 March 2004 to help them budget during the winter period.

These price increases are cost-reflective and come after a year in which the
market has seen:

--  Underlying wholesale gas prices increase by 15 per cent(1) with forward
    forecasts predicting a further 21 per cent increase in 2004.

--  Underlying wholesale electricity prices increase by 15 per cent(2) with
    forward forecasts predicting a further 17 per cent increase in 2004.

--  Gas transportation costs rising by 5 per cent

--  The increasing costs of delivering renewable obligations(3)

The new prices will mean an extra 28 pence a week on electricity and 39 pence a
week on gas for the average domestic customer(4).

As a further measure, British Gas is launching a new and enhanced Warm-a-Life
package to protect those customers which it believes need most help. From
February the company will focus on helping those vulnerable customers who, on
average, will see the price increase almost entirely off-set by a one-off £30
discount. As well as providing free home insulation worth up to £500, customers
who qualify for the new Warm-a-Life scheme will automatically qualify for any
new capped electricity tariffs. (5)

Mark Clare, Managing Director of British Gas, said: 'Underlying wholesale energy
costs have risen since the summer and continue to rise. Like other suppliers we
are being forced to reflect these increased costs in our prices. Over the last
few months we have been absorbing these additional costs ourselves, but
unfortunately we are no longer able to do so.'

Consumers are still better off than they were when competition was introduced in
the mid-nineties. Even after the increases, gas prices are 14 per cent cheaper
and electricity is 10 per cent cheaper in real terms(6).

Notes to Editors

(1+2) Gas based on - International Petroleum Exchange (IPE) year on year to Dec
2003 and forecast prices from IPE data at 1Dec 2003. Electricity based on
Spectron Power Index (SPI) year on year to 1 Dec 2003 and forward prices from
Argus data at 1 Dec 2003.

(3) The Government's renewable obligation will increase from 4.3 per cent to 4.9
per cent in 2004. Renewable electricity costs on average 2.5 times as much as
conventional wholesale electricity.

(4) Figures are based on an average of Quarterly cash/cheque standard, monthly
Direct Debit & Pre-payment bills at average annual consumption of 19,050kWh for
gas and 3,300kWh for single rate electricity, including VAT at 5%

(5) Warm-a-Life: To qualify, householders must be on one or more qualifying
government benefits. A one off payment of £15 per fuel is available for British
Gas customers who qualify. £500 is based on the average cost to install home
insulation. The enhanced Warm-a-Life package opens in February and will close
after 10,000 customers have been registered. This Warm-a-Life package is only
open to customers who have not previously been registered for Warm-a-Life
packages.

(6) Based on the average annual gas bill at a consumption of 19,050 kWh, across
monthly Direct Debit, quarterly cash/cheque standard and prepayment pay methods,
between Feb 1996 and Mar 2004, includes VAT. Based on the average annual single
rate electricity bill at a consumption of 3,300kWh across all regions and
payment methods, between Sep 1998 and Mar 2004, includes VAT.

Enquiries:
British Gas media relations 0208 734 8298 or 0208 734 8277
Centrica investor relations 01753 494900