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London: British Gas owner Centrica said on Wednesday it would raise gas and electricity prices for households by 35 per cent and 9 per cent, respectively, citing high wholesale gas prices.
The company, the biggest household supplier in the UK with over 16 million customers, said profits at its British Gas Residential unit had fallen 69 per cent in the first half, while wholesale prices for the coming winter are up nearly 90 per cent on the previous year.
Centrica shares closed up 2.7 per cent at 318.75 pence, valuing the business at £11.8 billion ($23.36 billion). It is the second time this year the company has hiked bills, having announced further double-digit per centage increases in January.
"We very much regret that we have had to make this decision at a time when many household budgets are already under pressure," British Gas managing director Phil Bentley said in a statement.
Centrica is the second of the six major suppliers to the UK market to raise prices in less than a week, after French supplier EDF Energy hiked gas and electricity bills 22 per cent and 17 per cent, respectively, on Friday.
The other four are expected to follow suit before the winter. They are RWE-owned nPower, Iberdrola-owned Scottish Power, E.ON UK and Scottish & Southern Energy.
The trend of repeated rounds of price hikes by the main suppliers trying to pass on higher costs was criticised in a report by British members of parliament on Monday, which said the market did not operate efficiently and that it was easy for companies to predict what their rivals were going to do.
The Centrica hikes, which are 25 per cent for customers who buy both gas and electricity from Centrica, will come in with immediate effect. The company guaranteed not to make any further rises before the end of the year.
Consumer body Energywatch was furious. "It's the consumer's bottom line that matters to us, not Centrica's. At a time when suppliers have been complaining about higher costs and difficult times, customers may be looking with some interest at the Centrica profit statement tomorrow morning," said director of campaigns Adam Scorer.
Colin Pollock, an analyst at Credit Suisse, said Centrica was raising prices at the retail division to meet full-year results forecasts.
"The tariff increases that Centrica has implemented today are broadly consistent with achieving consensus expectations for the residential energy business," he said.
British Gas makes up about a fifth of the overall company, but Centrica's finance director Nick Luff said Centrica could not take profit from its other divisions to help out customers due to the need for future investment.
"We need to make investment to stop the lights going out. To make an investment, it has to have a return. It's important that each part of the business makes a profit," he said.
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