Centrica blames “increasing costs of energy policy” for 12.5% electricity price hike

Centrica has said it will put up it’s standard tariff electricity price by 12.5% from mid-September, while its gas price will remain the same. This will see an average annual dual fuel bill for a typical household on standard tariff rise by £76 to £1120, an increase of 7.3%. The change will affect 3.1m British Gas customers.
The company said it would protect its 200,000 customers who receive the Warm Home Discount by crediting their accounts with £76, to offset the cost of the price increase. 

The company said: “The 12.5% electricity price rise this September reflects the increasing costs of energy policy, and delivery to customers’ homes since 2014. In that time, overall electricity costs have increased by 16%.”

It said it had suggested the following market reforms to Ofgem and government:

  • phase out the standard variable tariff by the market-wide ending of “evergreen” (ongoing) contracts; and
  • level the playing field so that all energy suppliers contribute to industry obligations such as the Warm Home Discount.

Mark Hodges, chief executive of Centrica Consumer, said “We are fully engaged in the debate over how to ensure the energy market works better for customers and have made a number of proposals to the Government and Ofgem. These include phasing out the standard variable tariff and levelling the playing field so all suppliers pay a share of energy policy obligations. We also welcome and share Ofgem’s focus on vulnerable customers.”

The announcement came on the same day as the company published it’s 2017 interim results, for the six months ending 30 June 2017. Centrica’s group revenue rose by 7% to £14.3bn, while adjusted earnings were down 11% to £449m including a higher net interest cost.

Iain Conn, Group Chief Executive, said: “Centrica delivered a solid first half financial performance despite reduced energy demand due to warm weather and strong competitive pressures, and we remain on track to achieve the 2017 targets we set out in February. We have made further significant strategic progress, continuing to reallocate resources away from our asset businesses towards our customer-facing businesses.  With the announced asset disposals and the creation of a new European E&P joint venture, we expect the first phase of our portfolio transformation to be complete by the end of 2017, leaving the Group well-positioned to deliver longer-term returns and growth.”

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