18th Jan 2008 11:00
Centrica retail price statement 18.1.2008 CENTRICA PLC: RISING WHOLESALE OIL AND GAS PRICES FINALLY IMPACTS BRITISH GASCUSTOMERS -- 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 andelectricity on the back of rises in wholesale gas and electricity markets drivenup by escalating energy prices in the second half of 2007. In the last six months of 2007, higher wholesale gas prices have reduced BritishGas operating margins to around 1 per cent and at current wholesale prices wouldbe loss making in 2008 without the increase. As a result, and with immediateeffect, British Gas electricity and gas retail prices will each increase by 15per cent(2). The price increase will not apply to around 340,000 customers on the British Gassocial tariff, Essentials, until spring 2008(3)and 2.4 million customers onfixed 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 of2007(5), wholesale energy prices have risen sharply and the forward gas pricefor 2008 has increased by 51 per cent, and the forward electricity prices by 61per cent(6). Further cost pressures are also affecting UK energy suppliers. The price chargedto British Gas to transport and distribute energy will rise by 7 per cent in2008 and the Government's targets for renewable electricity generation andcarbon emissions reduction are an increasing obligation. Combined, these nowmake up £264 each year of an average household energy bill(7). Even aftertoday'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 buyerof gas, we want lower gas prices. However, lower availability of supplies fromboth the UK and the Continent coupled with higher global oil prices have forcedup wholesale prices. We can't absorb the burden of these higher energy pricesand the costs of delivering a cleaner environment. As Britain's greenestelectricity supplier(9), we are investing in further lowering our carbonemissions. However, this also comes at an increasing cost for all. Ultimately,the best way of reducing energy bills is to make our homes more energyefficient." British Gas also called for faster progress on liberalising energy markets inContinental Europe to help break the historic link between gas prices and oilprices 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. TheUK gas market is competitive but is now fully linked to Continental Europe wherethe gas market is less competitive and prices are linked to oil prices. As oilprices have increased, so has the cost of gas across Europe, and this has hitthe 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 CERTscheme, from January 2008 British Gas is offering to insulate any UK homebelonging 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 homesreceiving free roof and cavity wall insulation. To offer further help for up to 25,000 of its most vulnerable customers, BritishGas has also launched a Winter Protection Package, called Winter Warmer, whichincludes a credit of up to £90 rebate and free insulation. It is also investinga further £13.45 million in the British Gas Energy Trust over the next fouryears, which helps consumers with debt problems - taking the total committed tothe Trust to £21.3 million since 2004. A new report from energywatch this week found that: "British Gas has and willhave made the most significant voluntary commitment to measures to reduce theimpact of fuel bills on its vulnerable customers." The report concluded thatBritish 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 sixsuppliers", 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 gasconsumption of 20,500 kWh and electricity consumption of 3,300 kWh on standardtariff are rounded and include VAT at 5%. Electricity price changes averagedacross all electricity regions - actual increase will vary by region and metertype. 3. Price increase applies from 1st March 2008 for Essentials customers. 312,000Essentials 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 atindustry average consumption of 20,500 kWh as a result of our 2 price reductionson 12th March and 26th April 2007. 6. Annual forward gas and electricity prices for calendar year 2008 since 8February (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 averageannual gas consumption of 20,500 kWh and electricity consumption of 3,300 kWh onstandard tariff, are rounded and include VAT at 5%. 8. Comparison of December 2006 to 18 January 2008 national average Dual Fuelbills at industry average annual consumption of 20,500kWh gas and 3,300 kWhsingle rate electricity for credit meters. £64 relates to customers paying byQuarterly Cash/Cheque. 9 The electricity which British Gas supplies has the lowest CO2 emissions of allthe major energy suppliers in GB (based on fuel mix disclosure for the year upto end March 2007). 10. Proportionality of social tariffs and rebates - paper for energywatchprepared by Cornwall Energy, January 2008. Copyright Business Wire 2008Related Shares:
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