A recent report shows that energy costs in the UK are rising sharply, even as energy providers are seeing huge profits. Take British Gas, for example – their profits jumped by over 20%, while everyday people are struggling with higher bills. In early 2012 alone, household energy costs shot up by as much as £90.
By the end of June, British Gas’s revenue had climbed by £64 million. The company has warned that more price hikes are on the way. They said wholesale gas prices went up by about 15% over the past year. Added to that are distribution costs and government fees, which could mean another £50 added to energy bills soon. Altogether, households might end up paying over £100 more on their energy bills within the next year.
British Gas claims that their average bills reflect the cost of wholesale gas, but critics disagree. They argue that the company is quick to raise prices even when the increase in wholesale prices is gradual. Some believe that although wholesale gas prices are starting to fall, energy companies are slow to lower their rates. It’s a common belief that energy firms are fast to hike rates when wholesale costs go up, but slow to reduce them when those costs decline.
On average, UK households shell out about £1,252 a year on energy, more than 10% of a typical couple’s household income. The rising costs have made energy a major concern for consumers. Nearly a third of UK residents say energy is becoming too expensive. Even though incomes have gone up a bit over the years, the general feeling is that energy price increases remain a heavy burden.
Back in 2004, the average UK household spent about £522 a year on energy. Now, that has jumped to more than £1,252 for many households. Despite this, energy companies seem untroubled by the current and future price hikes. They argue that the increases are due to higher wholesale gas prices, even when those prices are actually falling.