British Gas gives customers three clear ways to beat rising energy prices announced today

British Gas has today begun notifying its customers it will raise domestic tariffs for gas by an average 18%1, and for electricity by an average 16%1, on 18 August 2011.

British Gas recognises the difficulties customers are facing in the current economic climate, but today’s announcement follows steep rises in wholesale costs, which have increased 30%2 since last winter because of higher global demand for gas, driven by increased consumption in Asia and the impact on supply of unrest in the Middle East and North Africa.

Britain now imports almost 50% of the gas it needs from other countries around the world, and British Gas has to pay the market rate in the global wholesale energy market.

British Gas aims to offer competitive prices and protect customers from cost increases in the wholesale market as far as possible. But the company cannot continue to make a loss on the energy it sells, as it needs to be a profitable business in order to invest in future sources of energy for Britain. The company is investing around £1.5billion this year alone in securing new sources of energy for its customers.

British Gas is offering customers a number of ways to help off-set the rise and keep energy bills under control:

-- Free loft and wall cavity insulation: energy and HomeCare® customers can save around £145 with loft insulation and £110 with wall cavity insulation each year3
-- EnergySmartTM: a free online service, which includes a free energy monitor, and can save the average household up to £125 each year4
-- Flexible payment terms: paying by direct debit can save the average household around £67 each year and customers can pay more in some months and less in others5

British Gas Managing Director, Phil Bentley, said:

"We know there is never a good time to raise prices, but we are buying in a global energy market and have to pay the market rate.

"Rising wholesale costs is an issue facing all energy suppliers. Our advice to customers is to wait and see what happens in the energy retail market as a whole before making any decisions about switching supplier.

“In the mean time, they should get in touch with us and ask about the simple ways we’re offering to help keep bills under control.”

Customers can contact British Gas by calling for free on 0800 048 0202 or by visiting: www.britishgas.co.uk/threesimpleways.

As a result of today’s announcement, annual dual fuel bills for customers with average consumption are forecast to increase by £190. However, owing to the warm spring weather and continuing energy efficiency, British Gas customers may not see an increase in their dual fuel bills from last year.

British Gas has a strong record of offering competitive prices, as the company knows price is important to its customers. Until the changes announced today are implemented on 18 August 2011, British Gas is still the cheapest for electricity on average of any major supplier. British Gas has been the cheapest supplier of electricity for 15 weeks consecutively, and for 98 out of the past 113 weeks to 8 July 2011.

Customers who want peace of mind can fix their prices for the next two winters, until 31 March 2013, as British Gas is now offering a new fixed-price tariff, Price Promise March 20136.

Energy efficiency with British Gas

An independent report by the Centre for Economics and Business research (cebr), published in February this year, showed that British Gas’ homes saw a 22% reduction in gas consumption over a five-year period (2006 to 2010). British Gas customers who adopted a variety of energy efficiency measures and behaviours, such as loft and wall cavity insulation, energy efficient boilers and smart meters, which help households control their energy use with real-time information, saved an average of £322 each year.

Help for elderly, disabled and fuel poor customers

British Gas has more than 330,000 customers on its Essentials tariff, which offers extra help, discounted rates and energy efficiency measures and products, saving each Essentials household an average £134 each year even after the price rise7.

In January this year, to give extra help with the costs of staying warm during the severe weather, all British Gas Essentials customers received an additional £50 credit on their bills.

British Gas also committed an extra £20million to the British Gas Energy Trust to help customers struggling with energy and household debts because of life-changing events. The company also offers fair and flexible payment terms to customers who are struggling, helping them manage and avoid debt; British Gas has helped more than a million customers in this way over the past year.

Notes to editors

Non-commodity costs, which include transporting and distributing gas and electricity and the charges involved in meeting the Government’s carbon reduction targets, have also risen in the past year.

1 Based on standard tariff prices at average annual consumption of 16,500 kWh for gas and 3,300 kWh for single rate electricity, is an average across all regions and an average across the Monthly Direct Debit, Pay as You Go EnergyTM (where applicable) and Prompt Quarterly Cash or Cheque methods of payment, rounded and including VAT.

2 In its latest market report, independent regulator, Ofgem stated: “Gas for delivery this winter has risen from 60 pence per therm in January of this year to over 70 pence per therm. This compares to gas for last winter, which was 55 pence per therm by June 2010. This is a 30 per cent increase in wholesale gas prices.” The press release about the report can be found at:http://www.ofgem.gov.uk.

3 To take advantage of this free offer, customers can call free on 0800 107 3420 and arrange for an Energy Expert to carry out a no obligation survey. The offer is available to existing British Gas domestic energy and HomeCare® customers who apply by 31 October 2011. Limited availability and offer is subject to change or withdrawal at any time. Savings figure source www.energysavingtrust.org.uk/Energy-saving-assumptions, July 2011. Actual savings depend on individual circumstances. British Gas installs in mainland Great Britain only. Not all homes are suitable for insulation and customers will only be eligible for the free loft and cavity wall measures recommended by appointed surveyor. Customers will only be eligible for free measures where a minimum of two thirds of the available loft space can be insulated (when applied to the whole loft surface area) or available cavity wall space (when applied to the whole house). Free insulation is subject to square meterage limitations. Insulation beyond these limits is chargeable. For loft insulation offer only applies where the thickness of existing insulation is less than 60mm. Offer excludes scaffolding and any specialist equipment. Applicants only eligible for measures recommended by appointed surveyor. Customers must remain a British Gas energy or HomeCare® customer at point of installation. Installation must be completed by 31 December 2011. Offer cannot be used in conjunction with any other offer. Terms and conditions apply.

4 British Gas customers using EnergySmartTM can save up to £125 each year by reducing consumption by 12% using the EnergySmart online consumption hub and free electricity monitor (worth £39.99), based on average annual consumption of 16,500 kWh for gas and 3,300 kWh for single rate electricity, paying by Monthly Direct Debit on our Standard tariff prices as at 18 August 2011, rounded average across all regions including VAT. Actual energy savings will vary depending on individual circumstances. EnergySmart customers submit monthly meter readings online, by text message or iPhone app. More information is available at: www.britishgas.co.uk/howtosave.

5 Direct Debit gas customers will receive a discount off their Tier 2 consumption charges of 0.196 p/kWh, up to a maximum of £65 per year pro rated across their billing period. Direct Debit electricity customers will receive a discount off Tier 2 consumption rates (and night rates where applicable) of 1.873 p/kWh up to a maximum of £40 per year pro-rated across their billing period. Based on average annual single rate electricity consumption of 3,300 kWh and gas consumption of 16,500 kWh as at 18 August 2011, rounded and including VAT at 5%. Discount received varies accordingly to seasonal consumption.

6 British Gas is also offering customers a new fixed-term energy product, Price Promise March 2013, which guarantees prices for the next two winters until 31 March 2013, giving customers peace of mind by guaranteeing their prices won’t rise in the next 19 months. Price Promise March 2013 gas and electricity prices are fixed at a 5% premium above our 18 August 2011 standard tariff rates, based on average annual consumption of 16,500 kWh for gas and 3,300 kWh for single rate electricity, paying by Monthly Direct Debit on our Standard tariff prices as at 18 August 2011, rounded average across all regions including VAT. Further information is available at: www.britishgas.co.uk/pricepromise.

7 Comparing Essentials tariff with standard tariff prices based on consumption and payment methods in (1) above.