British Gas price announcement

British Gas price announcement

Centrica PLC

BRITISH GAS PRICING ANNOUNCEMENT

Friday 12 November 2010

British Gas today has begun notifying its customers that it will raise domestic tariffs for both gas and electricity by an average of 7% on 10 December 2010.

The price change, which will amount to an increase of £1.50 on the average weekly dual fuel bill, will affect around 8 million customers on British Gas’ standard and variable tariffs. However, the price rise will not be applied to the company’s 300,000 most vulnerable customers until the winter is over. Furthermore, 1.6 million customers on fixed price deals will not be affected in any way.

Today’s announcement follows two years of price cuts led by British Gas totalling £188 per customer per annum. For the vast majority of 2010, British Gas customers have enjoyed the lowest standard electricity prices of any of the major suppliers. Even after the price rise comes into effect, annual dual fuel bills at average consumption for British Gas customers will be £108 lower than in January 2009.

British Gas Managing Director, Phil Bentley, said:

“We know that rising energy prices come at a difficult time for many in Britain. That’s why we are not raising prices for our vulnerable customers, such as the poorest pensioners, until after this winter. We will continue to give them extra help – including lower rates – saving each an average of £128 per year.

“But higher prices needn’t mean higher bills with the free energy efficiency help available from British Gas. This year alone, we’ve fitted more than 120,000 energy efficient boilers and carried out more than 270,000 loft and cavity wall installations in our customers’ homes. We’re offering free cavity wall insulation to our customers who are 60 years or over, which could save them up to £110 each year.

“We are also helping our customers keep their bills as low as possible with our free online EnergySmart™ service, helping households take control of the amount of energy they use, via free real time monitors. EnergySmart™ can save the average household up to £110 per annum.”

Why is British Gas making this change?

Since lowering prices earlier this year, wholesale gas prices have risen by more than 25% since the Spring.

Other costs, such as network charges and environmental obligations, are rising too. In its September market report, the independent regulator, Ofgem, calculated that these other costs had risen 6% on the average dual fuel bill between February and September this year.

British Gas’ record on fair pricing

British Gas is the nation’s largest domestic energy supplier and buys gas and electricity from around the world to supply a third of the country’s homes. British Gas takes this responsibility very seriously and works hard to keep prices as low as possible for its customers.

British Gas customers have benefited from three price cuts in the past 20 months, and the lowest electricity prices of the major suppliers for 75 of the last 77 weeks. Since January 2009, these price cuts have saved the average customer £188 per annum. During 2010, on average, British Gas’ dual fuel prices have been amongst the lowest of the major suppliers.

As a result of British Gas’ competitive pricing position, together with improvements in customer service, the company has gained 270,000 extra customers so far this year.

Even after these increases, taking a blended national average of prices across all pay types in Britain, British Gas is offering the lowest standard electricity prices on average of any major supplier.

Helping customers cut their energy use and control their bills

As well as working hard to limit price rises, British Gas is investing in the future of its customers’ homes. The company recently announced the British Gas Green Deal, a £30million investment in British Gas customers’ homes, to permanently reduce their energy use. This will begin in the first quarter of next year.

British Gas is also leading the national roll-out of smart meters for homes and businesses, with almost 200,000 installed to date, allowing customers to put an end to estimated bills and take control of their energy use with real time information. British Gas has also carried out more than 270,000 loft and cavity insulations in the past year – almost 230,000 of which were done free of charge. Each year, loft insulation can help customers save around £145 and cavity wall insulation can save around £110.

Annually, British Gas installs 120,000 energy efficient boilers, which can reduce consumption by up to 30%. And over the last five years, British Gas has supplied a total of 100 million energy efficiency products to its customers.

British Gas also heavily supports the Government’s Carbon Emissions Reduction Target (CERT) scheme with an estimated spend of £1 billion between 2008 and 2011. And British Gas expects to spend £100 million as part of the Government’s Community Energy Saving Programme (CESP), which will help hard-pressed households save up to £300 on their annual energy bills.

Protecting vulnerable customers

British Gas’ Essentials programme is the single largest support programme for vulnerable customers in the energy market, and helps more than 300,000 vulnerable customers with lower tariffs and efficiency measures, including a home energy audit, free home insulation and free energy saving products.

The company spent £58 million on social programmes in the past year – the biggest contribution of any supplier (42% of the total, which is considerably more than British Gas’ market share). And £48 million of this was spent on social and discounted tariffs for Essentials customers who are elderly, disabled or on low incomes, saving them £122 on the average annual dual fuel bill.

British Gas targets help through its Essentials programme, which also offers advice and support aimed at tackling debt issues, maximising income and the provision of specialist support through our charity partners such as Age UK, RNIB and Scope.

Investing in Britain’s energy future

British Gas and its parent company, Centrica, will be investing more than £15 billion over the next 10 years in new sources of gas and electricity to help make sure British Gas customers have sufficient low carbon, reliable energy in the future.

British Gas recently unveiled a £15 million investment in solar technology for the nation’s schools.

ENDS

Notes to Editors:

1. Based on average annual consumption of 20,500 kWh for gas and 3,300 kWh for single rate electricity, 7% is an average across all regions and an average across the monthly direct debit, Pay As You Go and prompt quarterly cash or cheque methods of payment, rounded and including VAT

2. Prices for our Essentials customers will be held until 1 April 2011.

3. British Gas will reassess its customers’ direct debits from 10 December to ensure their payment plans are adjusted to take account of the new unit rates and help them to avoid accruing large debts

4. British Gas cut standard prices for customers three times in the past 20 months on average by:

• February 2009 – 10% gas price cut
• May 2009 – 10% electricity price cut
• February 2010 – 7% gas price cut

5. British Gas has offered the lowest electricity prices of all the major suppliers for 75 of the past 77 weeks. Lowest electricity prices are for single rate meter at industry average consumption of 3,300 kWh per annum between 7 May 2009 and 31 October 2010.

6. The Green Deal is the Coalition Government’s initiative to support energy efficiency measures for households and businesses without them needing to meet any upfront costs. Work to improve the energy efficiency of a home, through measures like loft and cavity wall insulation, will be paid back via the savings made on the energy bill. It has the potential to support tens of thousands of jobs as part of a green industrial revolution.

7. In September, British Gas announced its plans to ‘go early’ on the Green Deal by investing £30 million in installing energy efficiency measures in its customers’ homes at no up-front cost. Repayments from customers will be made via savings in their energy bill. Customers can register their interest in the British Gas Green Deal proposition via our website: http://www.britishgas.co.uk/greendeal.

8. EnergySmartâ„¢ savings based on reducing consumption by 12% by using online functionality and electricity monitor, based on average annual consumption for gas and for single rate electricity, paying by monthly direct debit on our standard tariff prices as at 10 December 2010, rounded average across all regions including VAT. Actual savings will vary depending on individual circumstances.

9. British Gas installs insulation in mainland Great Britain. Subject to availability and survey. Free offer applies to properties up to 140m² (cavity wall) and 80m² (loft). Excludes scaffolding and specialist equipment and only applies where the thickness of existing insulation is less than 60mm.

10. The Community Energy Saving Programme (CESP) is a joint initiative between the Government, energy suppliers and power generators and will see a total of £350 million worth of energy efficiency measures installed in the homes of hard-pressed communities over three years. British Gas is expecting to spend approximately £100 million as part of the programme saving 2.9m tonnes CO₂.

11. The Carbon Emissions Reduction Target (CERT) scheme obliges energy companies to help reduce the amount of CO₂ from British homes. The Government has set a target for the reduction of carbon emissions, and energy suppliers respond by providing grants and offers to help households improve their energy efficiency with measures such as loft and wall insulation.

12. The Ofgem Market Report from September 2010 can be found at: http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?file=Electricity%20and%20Gas%20Supply%20Market%20Report%20September%202010.pdf&refer=Markets/RetMkts/ensuppro

13. Insulation savings and assumptions can be found at: www.energysavingtrust.org.uk/Energy-saving-assumptions.