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Big rise for British Gas customers
British Gas delivered a blow to 7.8 million households as it confirmed a 10.4% rise in electricity prices and 8.4% hike for gas tariffs from next month.
Another 7.8 million households face surging winter energy bills after British Gas announced it will hike electricity bills by 10.4% and gas tariffs by 8.4% in the latest blow to family finances.
The group is the second of the "big six" providers to announce price increases this month after SSE recently revealed more than seven million customers will be hit with an 8.2% rise from November 15.
The move sees British Gas tear up a pledge made earlier this year to use an annual earnings windfall from the cold weather to keep a lid on tariffs.
Prime Minister David Cameron branded the announcement "disappointing" and urged unhappy consumers to switch suppliers for the best deal.
Rising energy bills will heap further pressure on the coalition Government ahead of the 2015 general election following Labour leader Ed Miliband's bold announcement last month that the party would freeze gas and electricity prices for 20 months if it was voted into power.
According to Ofgem usage figures, British Gas dual-fuel customers will see their average annual bill rise by £123 to £1,444 after the price increases, which take effect on November 23.
But regional variations in prices mean some customers will see their bills top £1,500 a year, with average prices rising by as much as 11.2% for some Scottish customers, while those in London will suffer a 10.6% increase and households in Yorkshire will have a 10.5% lift.
British Gas also said it was introducing a new fixed standard charge of 26p a day - which will have an impact on another 6.1 million customers - and a single variable unit rate, depending on usage and tariff.
Consumer groups warned that other providers would follow suit with more price rises, leaving some households to choose between "heating and eating".
Martin Lewis of MoneySavingExpert.com said: "This price hike round is big, and is nasty.
"It also means that two of the big six sheep have bleated, the rest are likely to follow within the next six weeks, leaving millions more homes already under the cosh having to choose between heating and eating."
Mr Cameron insisted the Government was doing what it could to try to keep costs down and get new suppliers into the market to increase competition.
He told BBC Sussex radio: "We are intervening because we are legislating to say these companies have to put their customers on to the lowest tariff.
"But there is something everyone can do, which is look to switch their electricity or gas bill from one supplier to another."
Mr Lewis warned consumers not to switch until all the suppliers had announced their price increases, but said customers should consider moving to a fixed-rate tariff before cheap deals close.
British Gas hiked tariffs by 6% last November ahead of a bitterly cold period when gas consumption rose 18% in the first four months of this year compared to 2012 - helping earnings at its residential arm to rise 3.2% to £356 million for the first half of the year.
The company said in May that because of the economic pressures facing many customers, the board had decided that any benefit from the exceptionally cold weather would be used to maintain ''price competitiveness''.
But it blamed the latest hike on the increasing cost of wholesale energy prices, Government energy initiatives and higher network charges for delivering power to customers' homes.
Ian Peters, managing director of British Gas Residential Energy, said: "We haven't taken this decision lightly, but what's pushing up energy prices at the moment are costs that are not all directly under our control, such as the global price of energy, charges that we have to pay for using the national grid that delivers energy to the home, and the cost of the Government's social and environmental programmes."
British Gas said the Government's energy company obligation (ECO) to help insulate homes will add £40 to average dual fuel bills in 2014, with another £10 on top from the cost of other environmental charges.
But Energy Secretary Mr Davey called into question its ECO cost claims.
He said: "I recently wrote to energy companies asking them to publish their costs of delivering the energy company obligation.
"Today's announcement shows why that's necessary, because British Gas's ECO numbers just don't add up when you look at what other energy companies are saying about their costs."
Mr Miliband said the increase showed there was "a real urgency" now for action.
During a visit to Peckham, south London, he told Channel 5 News political editor Andy Bell: "Week in, week out we see higher prices from these companies causing damage to families and businesses and frankly we have got a Prime Minister who is too weak to act.
"He is standing up for the energy companies not the consumer."
Mr Miliband said Mr Cameron was "weak when it comes to standing up to the strong".
He added: "The reality is that they are overcharging people in a market in a market that's not working and has broken."
Greenpeace policy director Doug Parr said: "British Gas's price rise is a yet another reminder that we should give up hope that the big six and levies on bills will deliver the energy savings needed to help the fuel poor.
"Rather, the Government should immediately instigate a massive programme of home insulation and efficiency, funded by revenues from carbon pricing.
"The UK has the worst domestic housing in Europe and the quicker we move on from divisive and misleading political wrangles over green levies to actually tackle the root of the rising bills problem, the better for everyone - except the energy companies, of course."
The Prime Minister's spokesman indicated the Government would look at ways to make it easier for consumers to switch suppliers.
He said: "Over recent years it has, through the internet and stuff, it has got easier. But if there are more ways in which that can be looked at, of course we would look at those."
At a regular briefing in Westminster, he said Mr Cameron's view was that "if customers aren't happy with the service they are getting, not happy with the prices they are getting, he would encourage them to go to the switching sites and see if they can get a better deal".
Chancellor George Osborne told ITV News it was important to secure economic growth so that people could afford to pay rising energy bills.
Speaking during his trade mission to China, he said: "It's incredibly hard for families and it will add to the pressure on families and that is why we are doing everything we can to help get people on low energy tariffs but also make sure our economy grows so that living standards are increasing and people can afford these energy bill increases."
But he dismissed Mr Miliband's promise of a freeze on bills, saying: "If any politician could just wave a wand and fix energy prices they would do it, but it can't be done like that because we've spent, over the last 15 years, not enough money investing in the power stations that provide the electricity."
He said the Labour policy was a "con trick, pretending with some gimmick that they can solve the problem" and the British people were "smart" and "they know that you have got to fix the economy".
He added: "You are not going to get a living standards plan unless you have got jobs and you've got an economy that is growing and trading with places like Hong Kong and China."
Energy Secretary Ed Davey said he had changed his supplier earlier this year and saved more than £200 and also wore a jumper at home but acknowledged he was "not satisfied at all" with the way the market was working.
"I'm sure people do wear jumpers, I wear jumpers at home," he told BBC2's Newsnight.
" We do need to help people with these bills, I'm extremely worried about them. We can use competition in the way we have but we can also make our homes warmer and we can use less electricity and gas by going energy efficient and that's what the Government is trying to do."
He added: "We need more competition, we inherited from the last lot the big six. We think the big six have been a real problem, that's why we deregulated."
The market was "doing better" with eight new entrants but "I'm not satisfied at all, I think what we inherited before was not good enough, we're dramatically increasing competition".
Mr Davey's predecessor Chris Huhne accused the Conservatives of hypocrisy over green levies, saying the carbon price floor was inserted into the coalition agreement at the insistence of Mr Osborne and the Tories as a "straight revenue raising measure" and it should be scrapped .
Mr Davey said it amounted to "slightly less than 1%" on people's bills so could not be blamed for the latest hikes.