Customers urged to quit British Gas

Several energy suppliers are offering households a better deal than British Gas, a Government minister said today as the firm increased its rates for millions of customers.

Minister Ed Davey said British Gas 'will need to justify their decision openly and transparently to bill payers'

Energy Secretary Ed Davey said consumers unhappy at the company's decision to hike electricity prices up by 10.4% and the cost of gas by 8.4% should look elsewhere, telling MPs that many other suppliers were offering lower prices.

British Gas said it had not taken the decision to increase prices lightly, adding the Government's "social and environmental programmes" were among the reasons for the rise in the cost of energy.

But speaking in the House of Commons, Mr Davey said consumers should look to one of the company's competitors.

He said: " I have said to British Gas customers that if they are worried about this they should change. There are a range of competitors and alternative suppliers that are offering a much better deal. And by the way, those suppliers are there because of the actions of this Government.

"In 2011, there were no independent suppliers able to compete with British Gas or compete with SSE, who had customers above 50,000. Now we have strong independent suppliers and customers can turn to them and I urge them to do so."

Mr Davey's comments came after a question from Labour MP Andy McDonald (Middlesbrough).

He said: "Given the announcement from British Gas, wouldn't you be better advised, instead of just expressing disappointment and urging transparency, to actually send a message out that there comes a point when these companies are jacking up prices that you will intervene?

"Can you tell us at what point you will intervene?"

Responding to an earlier question, Mr Davey said the company would need to justify its decision.

He said: "First, it's extremely disappointing news for British Gas customers. British Gas will need to justify their decision openly and transparently to bill payers.

"British Gas was the only company not to meet its targets under the previous obligation to make its customers' homes more energy efficient. That left more homes cold and their customers paying over the odds.

"British Gas has form in failing to meet its targets, the last ones set by Labour. I hope you can join with me in making sure British Gas is more transparent about its costs.

"We are pushing competition and I would urge customers of British Gas who are unhappy to change their supplier."

Labour leader Ed Miliband has promised to freeze energy prices for 20 months after the next general election if his party wins power.

Minutes after British Gas confirmed it was increasing its rates, shadow energy secretary Caroline Flint demanded to know what the Government would do about the latest price hike.

Speaking during the regular Commons questions to the Department for Energy and Climate Change, she said: "During the course of these questions, British Gas have announced that from November 23, they will increase their gas prices by 8.4% and their electricity prices by 10.4%.

"This is the company that, with Centrica, has passed on the highest share of its profits to its shareholders while at the same time making the least amount of investments into what we need to ensure our energy security in the future.

"Two years ago the accountancy firm BDO warned the big six energy companies could be under reporting their profits and they recommended tighter rules. But the Government and Ofgem failed to act.

"We back the new rules and so did a recent select committee report but, in their response, all the Government could say was 'Government is not in a position to comment'.

"Why won't you stand up for consumers, support Labour's price freeze and make the energy companies tell us exactly how much money they are earning?"

Labour MP Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) asked: "Your response regarding the announcement of British Gas's rise in energy prices... can you explain how British Gas increases its operating profit by nearly £1.6 billion, announced in June 2013, and yet we now find (people) around the country will see their prices rises by between 8% and 10%?

"How can that be fair to the consumers of this country and when is the Government going to get a grip on this and finally do something about it?"

Mr Davey replied: "We are doing things about it - not only promoting competition and urging people unhappy with their suppliers like British Gas to change and choose because there are plenty out there, thanks to this Government, not thanks to your government.

"But we are also making sure the energy companies are more transparent and I would urge British Gas to publish and be more transparent about the increased policy costs it is blaming for these bill rises.

"We have looked at their initial figures and we really question whether their policy costs, which they claim are putting up the bill, are the root cause."