THOUSANDS of people will be pushed into fuel poverty after British Gas announced "breath-taking" price increases for both gas and electricity, consumer groups have warned.
The price rises announced by British Gas – 18% for gas and 16% for electricity – will send the average dual fuel bill for its customers soaring by almost £190 a year.
Norman Kerr, director of Energy Action Scotland, said as many as one million households north of the Border could be plunged into fuel poverty – spending more than 10% of their income on energy costs – if each of the big six companies raise prices by the same level. ScottishPower has already announced a 19% increase in gas prices and a 10% rise in electricity prices.
British Gas, which has around 1.5 million customers in Scotland, said the rise was in response to a 30% rise in wholesale prices since last winter but Mike O’Connor, chief executive of Consumer Focus, said wholesale prices were still a third lower than their peak in 2008.
He has calculated that in this time British Gas prices have risen by around 44% on gas and 21% on electricity and “suppliers have made healthy profits”.
He added: “This price rise will send a shockwave across the country. The impact on customers will be severe, piling more pressure on severely stretched household budgets and pushing hundreds of thousands more households into fuel poverty.”
Mr Kerr said: “The size of the price increases announced by Scottish Gas are breathtaking. This move by the company will undoubtedly push thousands more people into fuel poverty and will cause fear among others as to how they will be able to afford their energy bills.
“If all the major energy companies bring in price rises of this magnitude, then the very real spectre of an unprecedented million Scottish households in fuel poverty will not be far off and this is unthinkable.”
Ann Robinson, director of consumer policy at uSwitch.com, added: “The impact on family budgets will be huge, but it will be particularly hard on those living on fixed incomes and I would urge both suppliers and the Government to start thinking now of how they can provide some support.”
The change in prices will directly affect nine million customers in the UK while a further million have fixed prices and will not be immediately affected.
British Gas last raised its prices in December when household bills increased by an average of 7%, adding £1.50 to the average weekly dual fuel bill.
Managing director Phil Bentley said: “We know there is never a good time to raise prices but we are buying in a global energy market and have to pay the market rate.
“Rising wholesale costs is an issue facing all energy suppliers. Our advice to customers is to wait and see what happens in the energy retail market before making any decisions about switching supplier.”
The company said it “cannot continue to make a loss on the energy it sells” and it needs to make a profit to invest in future energy sources.
Angus MP Mike Weir, the SNP’s energy spokesman, said: “There is a limit to which people can keep absorbing massive energy price increases like this. The UK Government has a duty to step in. Scotland is an energy rich nation, yet energy bills for Scottish households climb month after month. UK ministers also have to take action to help businesses avoid being crushed under the weight of these additional costs.”
Labour Glasgow Central MP Anas Sarwar accused British Gas of attempting to bury bad news by announcing its price rises amid a storm over phone hacking. He said: “To announce massive hikes in energy prices minutes after David Cameron began delivering a statement about the phone hacking scandal is a clear attempt by British Gas to bury bad news.”
