Gas Prices and Council Tax

Bad news today from British Gas that prices are on the up next month.

Good news from the Government this week that Council Tax Bills will be frozen for a third year.

At least Phil Bentley the Managing Director of British Gas has written to me directly today with the news and I have set out below what he has said so you can all read it:

I know this will be unwelcome news at a time when household budgets are already stretched. I hope you can take a few moments to read this email so that I can explain why we’ve made this decision and – most importantly – what help is available for our customers.

We are raising prices because costs that are outside of our control are going up.

• Britain’s North Sea gas supplies are running out. We’re having to buy more energy on international markets. (A few years ago we were a net gas exporter; today we import more than 60% of our gas needs.) The price of purchasing this energy at the market rate has risen by around 13% since last winter.
• The rising cost of the important upgrade to Britain’s national grid is being funded via energy bills.
• The costs of various government policies to ensure we have a clean, green, energy efficient future – which we support – are also rising significantly.

These three costs make up 85% of a British Gas bill – all are rising – and we have no control over them. There are two parts of a bill that we do control – making up the remaining 15%. Of these, our operating costs (10%) are down and our profit margins are flat at 5p in the pound. But rising prices don’t necessarily mean rising bills. There is lots of help available to our customers in Bury North to keep their bills under control. We are already helping your constituents:

• Free loft and cavity wall insulation. This can save a home hundreds of pounds a year. 1022 homes in Bury North have already been insulated by British Gas, saving them a total of up to £178,850.
• Warm Home Discount. Last year, we gave 285,000 customers the Warm Home Discount. Last year in Bury North,  557 received £120 credit on their electricity bill – totalling £66,840. Eligible constituents will receive £130 this year.
• Grants from the British Gas Energy Trust: We have invested £41 million in the Trust which gives grants to customers to help with bills. 29 households in Bury North received £36,455 worth of grants in 2012 so far. 

We recently sent you a pack outlining all the ways you can help your constituents access support with their energy needs this winter. If you would like to receive another copy then please let me know.

I know that this price increase is unwelcome. But energy efficiency is the way to deal with rising bills. Please encourage people in Bury North to contact us and take advantage of our free insulation offer, as well as the other help and support available.  We can be contacted on 0800 980 1917. We are currently embarking on the Green Deal and the roll-out of smart meters – it is important that energy companies and politicians speak up for the value of energy efficiency to support these schemes.

A word on our profits – often the first question we get asked when we raise prices. We make 5p in the pound on average, and have done since 2009. With that profit we invest in new energy supplies for Britain, energy efficiency for a cleaner energy future, help for those who need it most, and – as you heard earlier this week – jobs. We employ 35,000 people and have just announced a thousand new apprentices. Without our profits we wouldn’t be able to continue with these investments.