British Gas raises energy prices by 15%

The UK's biggest energy provider, British Gas, today announced an immediate price rise of 15% for its gas and electricity customers.

The company, which has around 16 million customers in the UK, blamed rising wholesale prices for the increase.

It said higher gas prices had reduced its operating margins to around 1% and it would make a loss this year if it didn't pass on the increases.

The much-anticipated price hike, which British Gas's parent company Centrica warned of before Christmas, will add £130 a year to the average dual fuel bill.

The rises almost cancel out cuts announced last March, which saw a 20% drop in residential gas prices and a 17% drop in electricity bills, and brought thousands of customers back to the company.

Phil Bentley, managing director of British Gas, said: "As the UK's biggest buyer of gas, we want lower gas prices. However, lower availability of supplies from both the UK and the continent, coupled with higher global oil prices, have forced up wholesale prices.

"We can't absorb the burden of these higher energy prices and the costs of delivering a cleaner environment. Ultimately, the best way of reducing energy bills is to make our homes more energy efficient."

The company recently announced plans to provide free home insulation to all homeowners aged 70 and above, and is offering the same deal to around 25,000 of its most vulnerable customers.

Around 2.4 million customers on fixed-price plans will be unaffected by the rise, while increases will be delayed until the end of winter for around 340,000 vulnerable customers on British Gas's Essential tariffs.