British Gas has announced an average price rise of 9.2% - 8.4% on gas and 10.4% on electricity

British Gas the largest energy supplier said in a statement that it had been a difficult decision to raise prices, but reflected increased wholesale and distribution costs and government subsidies.

Ian Peters, managing director of British Gas residential energy, said: “I know these are difficult times for many customers and totally understand the frustration that so many household costs keep on rising when incomes aren’t keeping pace. We haven’t taken this decision lightly, but what’s pushing up energy prices at the moment are costs that are not all directly under our control, such as the global price of energy, charges that we have to pay for using the national grid that delivers energy to the home, and the cost of the Government’s social and environmental programmes.”

British Gas said 500,000 of its most vulnerable customers would be protected by an automatic discount to offset the price increase over the winter.

Energy secretary Edward Davey described the news as "extremely disappointing" and said British Gas would need to justify its decision "openly and transparently".

British Gas estimated that installing energy efficiency measures under the government's Energy Company Obligation would add £40 to the typical household bill in 2014.

However, Davey questioned the company's figures. He said: “I recently wrote to energy companies asking them to publish their costs of delivering the Energy Company Obligation. Today’s announcement shows why that’s necessary, because British Gas’s ECO numbers just don’t add up when you look at what other energy companies are saying about their costs.”

Consumer Futures warned the price rise would push more households into fuel poverty. Policy director Adam Scorer urged consumers to try switching and making their homes energy efficient.

He also called on government and regulators to force greater transparency, simplify switching and recover energy policy costs in the fairest manner - "which may well be by taxation" - rather than bill levies.

Scorer said: "There is an avalanche of policy proposals being thrown at the energy market. Some have real merit. But there must be focus on making sure that price rises are justified and a greater ambition from government to make homes more energy efficient and reduce waste and bills. We need to see Government and regulators pull the right levers and pull them harder."

Fellow big six provider SSE announced an 8.2% price rise last week, prompting Labour leader Ed Miliband to brand energy companies as “predatory”.

17th October, 2013

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