British Gas Response To Ofgem’s Review Of The Energy Market

British Gas Response To Ofgem’s Review Of The Energy Market
     26 Nov 10
We welcome this latest review by Ofgem calling for greater transparency in the energy sector and believe that being clear about pricing with customers will help build their trust. We pride ourselves on being the most transparent of the suppliers and British Gas and its parent Centrica, have provided full disclosure of profits and costs in its audited accounts since privatisation.Analysts are forecasting that British Gas margins in the second half of 2010 will be around 3-4 per cent on residential energy sales, substantially less than the margin predicted by Ofgem for 2011.

Ofgem’s figures, published today, do not take account of the continued and growing impact of energy efficiency on customers’ bills. British Gas customers, following our advice on energy efficiency are, on average, using one fifth less gas now than they were in 2006, a trend that we expect to continue.

The UK has one of the most competitive energy markets in Europe which has brought significant benefits to customers in terms of prices and innovation. In October 2008, Ofgem itself found that the British retail energy market was amongst the most competitive in the world. In the six months to June 2010, UK households enjoyed the 4th lowest electricity prices of the EU15. Domestic gas prices in the UK have been the lowest in the EU for ten years.


The British Gas price rise next month will be the first in over two years, during which time prices have fallen by an average of £188 per annum. Even after this price change, average annual dual fuel bills for British Gas customers will be £108 lower than in January 2009, with energy efficiency measures bringing many customers more savings on their bill on top of this.


One thought on “British Gas Response To Ofgem’s Review Of The Energy Market

  1. I am surprised the current and past governments have not referred the matter to the competition commission, since the UK energy market experiences little real competition as defined in most economic books.
    Nor do the profit margins that are being maintained, seem necessary to maintain investment in secure and reliable new energy supplies.
    Due to Europe being flooded with gas, due to decline in demand and increased competition from new gas sources from such countries as Qatar and the USA, this has resulted in a price disconnection between oil and gas prices. In fact, Russia’s Gazprom has been forced to offer massive discounts in its pipeline gas to European customers in order to keep in line with the much lower EU wholesale/ Henry Hub/ spot prices. Instead of increasing retail prices the energy companies in the UK market, instead the regulator should be encouraging them to cut retail prices to bring them closer to mainland continental retail prices. Doing so would still enable them to raise sufficient income to pay shareholders and invest in the major infrastructure schemes they have planned over the next decade.

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