LONDON (Reuters) - Energy supplier Centrica hiked its household electricity and gas prices by an average of 9.2 percent - more than three times the rate of inflation - on Thursday, inflaming a political row over the rising cost of living.
The leader of the opposition Labour Party, Ed Miliband, put increasing energy bills at the heart of his campaign for the 2015 election last month when he said he would freeze prices for 20 months if his party wins power.
Energy prices have already risen by 24 percent over the last four years, according to regulator Ofgem, ramping up the pressure on household finances at a time of wage stagnation.
The hike by Centrica, Britain No.1 gas supplier by number of households and one of the country’s “big six” energy companies, is due to come in on November 23.
It will add 107 pounds to the average annual bill for customers taking both gas and electricity, pushing charges up to 1,297 pounds a year, Centrica said.
The increase is higher than the 8.2 percent hike announced by rival SSE last week which prompted a flurry of criticism from consumer groups and politicians.
Liberum analyst Peter Atherton said the other energy providers would also likely lift their prices.
“These companies are facing rising costs. They all have a similar cost base, so you’d expect them to all raise their prices at roughly the same time and by roughly the same amount. It is no conspiracy, it’s a function of their business,” he said.
RWE npower, owned by Germany’s RWE AD, Iberdrola’s Scottish Power, EDF Energy and Eon make up the remaining big six suppliers in Britain.
“PEOPLE HAVE A CHOICE”
Centrica supplies energy to homes through its British Gas business. Like SSE, it said the hike was down to a rise in the global wholesale price of energy, the cost of using the national grid and levies attached to government social and environmental programmes.
“What’s pushing up energy prices at the moment are costs that are not all directly under our control,” said Ian Peters, British Gas’s managing director of Residential Energy.
The government urged consumers to switch suppliers to fight price hikes. “People have a choice. They can look for the best deal available, including from smaller suppliers, with the confidence that switching will make an immediate difference to their bills and force the Big Six to compete on price,” Energy secretary Ed Davey said in a statement.
The pledge by Labour in September to temporarily freeze energy prices before launching a full restructuring of the market wiped a combined 2.7 billion pounds in market value off SSE and Centrica, the two Britain-focused suppliers, in two days. Neither stock price has recovered.
Centrica, which has a market capitalisation of about 19 billion pounds and also has a business in the United States, posted annual operating profit of 2.6 billion pounds in 2012.
The latest price rise comes as Britain’s energy strategy comes under the spotlight, with a report for the prime minister warning on Thursday that Britain’s shrinking power capacity could lead to blackouts during the winter of next year.
Top of the list to help keep the lights on in the longer term is the government’s bid to build the country’s first new nuclear power station since 1995.
As part of this plan, Britain announced on Thursday it was opening up its nuclear sector to Chinese investment, days after saying a deal with EDF over the building of a new nuclear power station was “extremely close”.
Additional reporting by Karolin Schaps and Paul Sandle; Editing by Kate Holton and Pravin Char