British Gas has announced it will increase the price of its standard electricity tariff by 12.5 percent next month.
Some 3.1 million customers will be affected by the move from September 15th.
The firm’s parent company Centrica said the increase was driven by higher costs in transmitting energy and by government policy.
But experts have previously predicted that currency fluctuations following last year’s Brexit vote would eventually cause prices to surge.
The UK is a net importer of energy, meaning that it is acutely affected by price flux on international markets.
And Claire Osborne, an energy expert at uSwitch, told HuffPost UK much of the UK’s imported energy comes from Europe.
“At the beginning of this year we saw wholesale prices shoot up by 45 percent and that was largely driven by issues on the Continent,” she said.
“There was damage with a connection between the UK and France and some nuclear stations had issues too, as well as currency changes.
“That’s an example of how linked in we are to the Continent in terms of our energy market.
It's fairly reasonable to assume that currency fluctuations may have an impact later on Claire Osborne, energy expert
“What British Gas has said is that the price rise is driven by network costs - that’s the pipes and wires, as well as policy costs, such as the installation of smart meters.”
Osborne warned that further turmoil in currency exchange rates could drive further increases later this year.
“While British Gas has not suggested Brexit will push prices up but it is fairly reasonable to assume that currency fluctuations may have an impact later on,” she said.
“That’s why I say to people affected by this today, shop around and sign up for a fix rate deal - there’s plenty out there.”
And Tuesday’s shock rise has prompted renewed criticism of energy suppliers.
Labour MP Denis Skinner compared the price increase with a recent pay rise for Centrica chief executive Ian Conn.
Mark Hodges, another executive from British Gas parent Centrica Consumer, said the rise was a “very difficult decision”.
“British Gas hasn’t had a price rise for nearly four years. In fact we’ve been reducing prices,” he said. “It’s been a very difficult decision to make but the costs of providing electricity are rising.
“We’ve held off making an increase for as long as possible, and for many months after other suppliers significantly raised their prices.”
But the government appeared to question the firm's explanation for the rise.
A spokesperson for the Department of Business, Energy and Industrial Strategy said: "Wholesale prices are the bigger portion of household bills and coming down."
How Do I Change Energy Suppliers? Martin Lewis Explains
Money saving expert Martin Lewis posted his take on the British Gas price increase on Tuesday, explaining how people can change energy suppliers.
Writing on Facebook, Lewis said:
“A warning to all British Gas customers! It is going to hike electricity prices from 15 Sept - overall for a typical dual fuel customer this will see your bill rise by 7%. Here’s my view on it...
“This is British Gas’ catch-up price hike. It was the only one of the big 6 firms not to raise prices at the start of the year, and now, as predicted, it’ll do it from September. And that means, if, (as is possible) we see another batch of rises this coming winter, its customers will feel like they been price-slapped twice in rapid succession.
“While this freeze has given people a little respite from price moves over the key high use winter period – the problem is for many the false sense of security that it wouldn’t move prices meant they did nothing, when they could’ve cut their rate, and locked that in for longer, by actively picking a far cheaper 1 year fixed energy tariff.
“So let this be a clarion call for British Gas customers (and all those on big 6 standard tariffs).
“Do not sit on your backside and just take this. For someone with typical use, on British Gas’ standard tariff you’re going to be paying £1,120 a year from September.
“The cheapest tariffs on the market are £840 for the same usage. And switching is usually no big deal - there’s no break in service, no engineers coming to call - it’s the same gas, same electricity, same safety – only the price and who provides customer service actually changes.
“The easy way to find your cheapest (it depends on your use and where you live) and customer service ratings is via my www.cheapenergyclub.com which unlike some doesn’t default to showing tariffs where there’s a commercial link.”
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