British Gas has this morning (Friday 8th July) announced substantial price increases to both its gas 
and electricity tariffs.
The dramatic price increases of 18 per cent for gas and 16 per cent for electricity comes after weeks of speculation after its parent company Centrica announced it would have to raise its prices due to global issues including the Japan disaster and the rising costs of oil due to unrest in the middle east.
According to the UK's only fuel poverty charity National Energy Action (NEA) over 5.4 million UK households are currently in fuel poverty, the charity estimates that if all the ‘big six' energy companies raise their prices by a similar amount it will increase this number to approx 6.1 million.
Rising domestic costs are primarily driven by global prices; the charity believes that the only solution is to improve energy efficiency standards in properties occupied by low-income households and to mitigate the impact of high energy prices for the most vulnerable through rebates and income maximisation measures.
One recurring cause of tension is Government's increasing practice of funding programmes to address both fuel poverty and carbon abatement through levies on domestic energy bills. This is regressive since it takes no account of ability to pay and can result in additional households becoming fuel poor.
The Energy Market Reform document is expected next week and it is likely to indicate that further increases in energy prices are on the horizon to fund additional measures proposed by Government.
The charity is calling for both short term and long term measures, Jenny Saunders NEA's Chief Executive said: "What we need in the short-term is Government to divert the additional revenues accruing from VAT on domestic gas and electricity to fund energy efficiency programmes for low-income households.
"NEA anticipates that if all suppliers follow the ScottishPower increases of last month then Government will receive an additional £225 million in VAT receipts. This could be added to the Warm Front budget to provide a transition fund until the Energy Company Obligation takes effect from 2012/13.
"We also need Government to commit to retaining the higher rate of Winter Fuel Payment for financially disadvantaged older households.
"Longerterm we need an Energy Company Obligation which is both adequately resourced and ring-fenced to fund a comprehensive energy efficiency programme for low-income households and a clear road map showing how the Government's target to eradicate fuel poverty by 2016 can still be met."
People who are struggling with their energy bills or would like free impartial advice on switching or insulation measure should contact the Home Heat Helpline on 0800 33 66 99.
Editor's notes.
- NEA is the UK's leading fuel poverty charity campaigning for affordable warmth in the homes of vulnerable people. For further details visit http://www.nea.org.uk
- Fuel poverty is defined as the need to spend over 10% of household income on fuel costs to maintain adequate warmth for health and comfort.
- British Gas Price Increases:
Electricity: +16%
The announcement this morning adds £71 to the average British Gas electricity bill. The average British Gas Standard Credit Electricity Bill is now £512.
Gas: +18%
The announcement this morning adds £121 to the average Standard Credit Gas Bill. The average paid is now £791.
British Gas (Combined Standard Credit Gas and Electricity Bills is now) - £1,303 an increase of £192 from £1,111)
Impact on fuel poverty:
4. If all suppliers follow suit and increase their prices at the same rate we've seen from British Gas and Scottish Power fuel poverty in England will increase from approximately 4.1m households in ENGLAND to 5.1m.
5. UK wide these increases will push an additional 1.2m household's into fuel poverty from approximately 4.9m to 6.1m households.
Date: 08.07.2011
Embargo: Immediate Release
Press Enquiries: Lesley Tudor-Snodin, Press Officer at NEA on 0191 261 5677 or e-mail lesley.tudor-snodin@nea.org.uk