Oil prices force power companies to increase prices

Powergen is increasing its domestic electricity charges by 7% and its gas charges by 12%, for its six million customers.

The increases, which are due to higher wholesale electricity prices, will add £52 a year to a typical “dual fuel” bill.

British Gas is also considering a 15% increase in gas prices although a spokesman said that no decision had been taken yet.

Powergen’s increases are the fourth for its gas customers since January last year, and the third increase for electricity customers.

The higher charges are in response to a 50% increase in the price of oil over the last 12 months to approximately $66 a barrel.

Consequently the price of gas imported from the continent has risen, as on the continent, the wholesale price of gas is linked to the price of oil. This has made it much more expensive to generate electricity in the UK’s gas-fired power stations.

A typical household energy bills has risen by approximately 20% in the last 18 months according to the consumer organisation Energywatch.

Energywatch spokesman, Graham Kerr said: “Oil producers and energy retailers are all doing very well - at the expense of the consumer”.