Turning up the heat on gas hike

THE news that heating bills are set to rise next month is the last thing that millions of householders want to hear as the cold winter weather forces them to turn up their thermostat.

British Gas has responded predictably to an increase in wholesale energy prices by passing it on to the consumer, with the average customer expected to see their utility bills rise by seven per cent. The firm justifies the tariff hike by pointing out that it has recently been forced to sell gas at a loss – a situation which it says cannot be sustained.

However, this is not the complete picture.

Although energy prices have begun to increase, they are still around half of what they were two years ago when prices peaked.

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The eight million customers who are now being told their bills must go up in order to cover these increased costs might wonder why the same logic was not applied when the cost of gas was dropping.

Consumer groups accuse suppliers, such as British Gas, of failing to drop their own bills when conditions would have allowed them too. Of course, British Gas is run as a business and must be allowed to be profit in order to remain be viable and carry out the necessary investment to guarantee the nation's future supplies.

It should also be recognised that it has taken steps to protect its most vulnerable customers from the price rise – with the poorest pensioners spared the increase until after this winter. However, what this latest price increase does highlight is the need for greater transparency over pricing, especially as Energy Secretary Chris Huhne has already raised the possibility of domestic bills increasing by a third to help the Government meet its climate change obligations.

The need for greater protection for bill-payers is made all the more pressing by the decision to axe the Consumer Focus quango which was set up to protect the rights of householders.

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Since taking office the coalition Government has championed the importance of fairness. This principle should not be lost on our energy providers. The coldest winter on record for 30 years saw British Gas profits soar to almost 600m in the first half of this year. If this pattern repeats itself during the weeks and months ahead, then the firm must be able to demonstrate that its pricing is just and fair.

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