Customers, Strategy & management

Trade body responds to 12.5 per cent price increase for British Gas customers

The Energy Networks Association (ENA) has said networks cannot be held to blame for the 12.5 per cent price rise announced by British Gas today.

British Gas attributed the move to rising input costs, including those from “transmission and distribution costs associated with feed in tariffs”.

In response, ENA chief executive David Smith said: “Network companies are responsible for operating and maintaining 1 million kilometres of electricity cables across the UK, which on average cost consumers 35p a day.

“Ofgem annual reports show that electricity network costs have increased by £10 since 2014, as companies have invested in our energy networks that has delivered record levels of network reliability, performance and new forms of green electricity generation. This forms only part of the £76 increase that British Gas has announced.”

Smith added that, looking forward, network costs are expected to remain broadly flat over coming years and in some cases, will fall.

ENA also pointed to Ofgem analysis which shows that between 1990 and 2006 the total cost of running the GB electricity and gas networks fell 45 per cent.

“Despite significant planned investment between 2006 and 2017 they are still 17 per cent lower,” said Smith.

British Gas’s decision to introduce its 12.5 per cent increase met with criticism from a range of politicians and consumer groups.

Shadow chancellor John McDonnel said the hike was “extortionate” and shadow energy minister Alan Whitehead said the “whopping” increase “doesn’t appear to be justifiable”.

Iain Conn, chief executive of British Gas parent company Centrica insisted however that the rise was necessary to counteract sustained rises in the cost of energy arising from policy and environmental costs. Conn said these have forced British Gas to sell electricity at a loss over the past twelve months.

News of the British Gas price rise came alongside Centrica’s interim results for 2017. The financial report showed a drop in profits and earnings for the group, but reported that performance for the customer-facing business had held steady compared with the first half of 2016.

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