British Gas Pricing

Centrica PLC
                  Centrica retail price statement

18.1.2008

CENTRICA PLC: RISING WHOLESALE OIL AND GAS PRICES FINALLY IMPACTS BRITISH GAS
CUSTOMERS

    --  Increase delayed for around 340,000 vulnerable customers on Essentials
        tariff until the end of winter

    --  2.4m customers on fixed-term tariffs to receive no increase at all

    --  New fixed price product available to offer price certainty for customers

    --  British Gas - the first energy supplier to offer free insulation to
        anyone over 70

    --  £7 in every £10 spent (by all UK energy suppliers) on vulnerable
        customer initiatives comes from British Gas(1)

    --  Retail electricity and gas prices will each increase by 15 per cent

British Gas today announced an increase to its tariffs for domestic gas and
electricity on the back of rises in wholesale gas and electricity markets driven
up by escalating energy prices in the second half of 2007.

In the last six months of 2007, higher wholesale gas prices have reduced British
Gas operating margins to around 1 per cent and at current wholesale prices would
be loss making in 2008 without the increase. As a result, and with immediate
effect, British Gas electricity and gas retail prices will each increase by 15
per cent(2).

The price increase will not apply to around 340,000 customers on the British Gas
social tariff, Essentials, until spring 2008(3)and 2.4 million customers on
fixed term products will not be affected at this time(4).

Since British Gas reduced its retail gas prices by 20 per cent in the spring of
2007(5), wholesale energy prices have risen sharply and the forward gas price
for 2008 has increased by 51 per cent, and the forward electricity prices by 61
per cent(6).

Further cost pressures are also affecting UK energy suppliers. The price charged
to British Gas to transport and distribute energy will rise by 7 per cent in
2008 and the Government's targets for renewable electricity generation and
carbon emissions reduction are an increasing obligation. Combined, these now
make up £264 each year of an average household energy bill(7). Even after
today's increase our prices for an average customer will be 6 per cent (£64)
cheaper than 2006 prices(8).

Phil Bentley, Managing Director, British Gas, said: 'As the UK's biggest buyer
of gas, we want lower gas prices. However, lower availability of supplies from
both the UK and the Continent coupled with higher global oil prices have forced
up wholesale prices. We can't absorb the burden of these higher energy prices
and the costs of delivering a cleaner environment. As Britain's greenest
electricity supplier(9), we are investing in further lowering our carbon
emissions. However, this also comes at an increasing cost for all. Ultimately,
the best way of reducing energy bills is to make our homes more energy
efficient.'

British Gas also called for faster progress on liberalising energy markets in
Continental Europe to help break the historic link between gas prices and oil
prices and provide greater long-term price stability to the UK energy market.

Phil Bentley added: 'Our energy market is now part of a much bigger picture. The
UK gas market is competitive but is now fully linked to Continental Europe where
the gas market is less competitive and prices are linked to oil prices. As oil
prices have increased, so has the cost of gas across Europe, and this has hit
the UK.'

To help reduce the impact of rising costs and address emissions from homes,
British Gas is rolling out a new free insulation programme. Under the new CERT
scheme, from January 2008 British Gas is offering to insulate any UK home
belonging to someone who is over 70 years old at no cost to the householder. The
'no means testing' approach to the scheme could see up to 1.7 million homes
receiving free roof and cavity wall insulation.

To offer further help for up to 25,000 of its most vulnerable customers, British
Gas has also launched a Winter Protection Package, called Winter Warmer, which
includes a credit of up to £90 rebate and free insulation. It is also investing
a further £13.45 million in the British Gas Energy Trust over the next four
years, which helps consumers with debt problems - taking the total committed to
the Trust to £21.3 million since 2004.

A new report from energywatch this week found that: 'British Gas has and will
have made the most significant voluntary commitment to measures to reduce the
impact of fuel bills on its vulnerable customers.' The report concluded that
British Gas' financial commitment to helping its vulnerable customers was
'nearing double the level that would be expected from its market share'(10).

Ends

Centrica Investor Relations: 01753 494900

Media Contacts:

Alan McLaughlin, British Gas on 0845 072 8002

Andrew Turpin, Centrica PLC on 01753 494088

Notes to editors

1. British Gas' contribution is based upon the 'Costs (£)' attributed to
'British Gas' within table 3.2 of the Cornwall Energy Associates report
'Proportionality of Social Tariffs and Rebates' as a proportion of 'All six
suppliers', plus £13m committed funding for the British Gas Energy Trust and
£2.3m committed funding of British Gas' 'Winter Warmer'.

2. Comparisons for a customer with industry standard average annual gas
consumption of 20,500 kWh and electricity consumption of 3,300 kWh on standard
tariff are rounded and include VAT at 5%. Electricity price changes averaged
across all electricity regions - actual increase will vary by region and meter
type.

3. Price increase applies from 1st March 2008 for Essentials customers. 312,000
Essentials customers + 25,000 Price Promise customers.

4. Our fixed/protected prices are subject to separate terms and conditions.

5. Reduction for a gas Monthly Direct Debit customer on standard tariff at
industry average consumption of 20,500 kWh as a result of our 2 price reductions
on 12th March and 26th April 2007.

6. Annual forward gas and electricity prices for calendar year 2008 since 8
February (based on British Gas price cut announcement).

7. Total annual costs incurred per customer for Transport & Distribution - £222,
CERT - £31, ROC - £12. Based on an a customer with industry standard average
annual gas consumption of 20,500 kWh and electricity consumption of 3,300 kWh on
standard tariff, are rounded and include VAT at 5%.

8. Comparison of December 2006 to 18 January 2008 national average Dual Fuel
bills at industry average annual consumption of 20,500kWh gas and 3,300 kWh
single rate electricity for credit meters. £64 relates to customers paying by
Quarterly Cash/Cheque.

9 The electricity which British Gas supplies has the lowest CO2 emissions of all
the major energy suppliers in GB (based on fuel mix disclosure for the year up
to end March 2007).

10. Proportionality of social tariffs and rebates - paper for energywatch
prepared by Cornwall Energy, January 2008.