Inquiry demand after third energy price rise

British Gas said yesterday it was raising gas and electricity prices by 15% with immediate effect, meaning most of its 16 million customers will pay around £130 more over the coming year. The inflation-busting rise is expected to take customers' total spending on heating and lighting to more than £1,050 for the year - and add £1bn to British Gas coffers this year.

The government was coming under renewed pressure last night to launch an investigation into the home energy market after Britain's biggest supplier became the third power firm to raise prices substantially. The move, which was blamed on higher wholesale costs, prompted consumer groups to demand a Competition Commission investigation into whether the big six power firms that dominate the market were acting in "tacit collusion".

They say in other European countries recent price rises have been substantially less than the 15%-plus increases heaped on UK consumers - evidence that the UK market is not working. In Germany some bills have been falling, while in France gas prices have risen by 4%.

British Gas said yesterday it had been forced to put its prices up due to a 51% increase in wholesale gas prices, and to pay for new environmental charges. Much of Britain's gas is sourced from the North sea, Norway and continental Europe.

On Tuesday rival EDF claimed wholesale gas prices had risen by 117% when it raised its gas prices by almost 13%. Two weeks ago npower argued they had risen by 66% as it put 19% on gas prices.

The industry regulator, Ofgem, this week contradicted all three claims, saying one-year forward wholesale gas prices had in fact risen by 31% over the same period. The correct figure for electricity was 40%, it said. In the last three weeks oil and wholesale gas prices have been falling.

"I'm sick and tired of hearing energy companies try to justify the latest bout of pain they are inflicting on their customers," said Allan Asher, chief executive of consumer body Energywatch. "This increase piles on even more agony for consumers - particularly those on lower incomes. It is obvious to anyone who looks at it, this market is not delivering good value to consumers. The reasons are well known and explain why Energywatch has been calling on the government to call in the Competition Commission. The commission is a fantastic resource to be used in precisely these issues of market structure. It is a mystery to me why neither Ofgem nor the government want to use it."


Miles Brignall

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