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Millions Face Higher Bills As Scottish Gas Announces 14 Per Cent Rise

Posted on: Sunday, 11 September 2005, 09:00 CDT

ENERGY bills for millions will rise this winter after Scottish Gas announced a 14.2 per cent increase in gas and electricity prices - despite a 64 per cent jump in profits.

The increase, the second in a year, means an average annual gas bill for a three-bedroom home will rise by GBP 57 to GBP 462, while the electricity bill will rise by GBP 39 to GBP 307, prompting outrage from consumer groups and industry watchdogs. Scottish Gas, which with its sister company British Gas, is the UK's biggest energy supplier, said soaring oil prices and declining North Sea gas reserves had forced the rise.

It means Scottish Gas is the most expensive of the three gas supply companies who hold 95 per cent of the market. The firm has pushed up gas prices by 40.3 per cent and electricity by 32 per cent in three years.

It also means misery for Scottish pensioners, with early forecasts by the Met Office suggesting this winter could be among the coldest in 50 years.

The increase - affecting about 17 million customers across Britain, and one-and-a-half million in Scotland - will come into effect from 19 September.

The owner of Scottish Gas, Centrica, insisted profits would be "significantly reduced" by higher energy demand, despite making GBP 249million earlier this year. It also promised there would be no further increases in bills this year.

Last month, Powergen said it would be putting up the price of gas by nearly 12 per cent, increasing average bills by GBP 46 a year for its 120,000 Scottish customers.

Allan Asher, chief executive of the watchdog, Energywatch, said the wholesale energy market was failing the consumer.

He said: "What we face is not just an ineffective energy market but one that, for the consumer, is broken. What we need is a meaningful reform agenda from the market which gets to the root cause of why UK consumers pay grossly inflated prices for energy."

The GMB union condemned the announcement as "shameful" and warned electricity shortages still "loomed large".

The GMB national officer, Brian Strutton, said: "This is all about corporate profit, behind a smokescreen of energy costs. "The hard reality for the poor and elderly is that they will need more help from the UK government this winter."

Scottish Gas promised that 40,000 of its "most vulnerable" customers north of the Border would be able to take advantage of a GBP 60 rebate scheme.

Jim Needham, the director of Scottish Gas, said: "We are continuing to deliver on our new Winter Rebate scheme - the biggest social initiative carried out by a Scottish energy company."

Millions of Scottish Gas customers are likely to check its prices against those of its rivals. Together with British Gas, it lost 1.1million households last year and a further 445,000 in the first six months of this year.

Scottish Gas said price rises wouldn't even cover the rising cost of wholesale gas and electricity, which is 50 per cent and 61 per cent higher than a year ago respectively.

Richard Lochhead, the SNP energy spokesman, said: "This is a blow for Scottish Gas customers and will plunge tens of thousands of Scots into fuel poverty. It is absurd that this should happen."

"Gordon Brown can't be allowed to get away with sitting on his hands raking in billions of pounds in extra oil and gas revenues and at the same time, leaving Scottish households and businesses in the lurch. The government's energy policy and the market is clearly failing Scotland."

Karen Darby, chief executive of the price-comparison website SimplySwitch.com, said: "These latest price increases will hit many consumers hard - particularly those on fixed incomes. A typical household will be paying GBP 48 more a year for the same amount of energy used [in the year previous]."

Mark Clare, the managing director of British Gas, said: "We are no longer an energy island - spiralling world oil prices are now having an unprecedented impact on the cost of gas as the UK is now dependent on imports."

Source: Scotsman, The

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