British Gas Raises Energy Prices as Labour Pushes Price-Cap Plan

Britain’s largest energy supplier announced a price increase, intensifying the political debate about higher utility bills and the rising cost of living.

British Gas, owned by Centrica Plc (CNA), said it will raise household prices by an average of 9.2 percent next month, more than three times the rate of inflation. It’s the second of the six suppliers that dominate the U.K. market to raise prices after SSE Plc (SSE) said bills will go up 8.2 percent last week.

“These are very disappointing announcements by British Gas,” Prime Minister David Cameron said in a BBC interview.

Labour leader Ed Miliband said last month that he would freeze energy prices for 20 months if his party wins the 2015 general election. Cameron’s Conservative Party has tried to increase competition to address the price increases that energy companies say are needed to offset higher wholesale prices, delivery costs and surcharges required to pay for government environmental programs.

U.K. consumer prices rose 2.7 percent in September from a year earlier, while average wages increased by only an annual 0.7 percent in the three months through August.

Price Caps

Labour’s plan to cap energy prices until the start of 2017 represents the starkest dividing line yet with Cameron as the cost of living comes becomes an election issue. The government’s Energy Bill going through Parliament gives ministers some powers to force companies to move some customers onto less costly tariffs.

Labour leader Miliband accused Cameron of not doing enough to keep energy prices down when they clashed at the premier’s weekly question-and-answer session in the House of Commons yesterday.

“It is make-up-your-mind time for the prime minister,” Miliband said. “Whose side is he on: the energy companies’ or the consumers’?”

Cameron responded that “of course we all want to see energy prices come down. That is why we are putting people on the lowest tariff, but the one thing that will not work is a price con, and that is what he is recommending.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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