British Gas has announced that they are to raise electricity prices by 12.5% from September 15th.
Centrica, the company which owns British gas has claimed that the price rise was due to increased transmission and distributions costs. The company also pointed the finger at government policy as a reason for the hike.
However, the government has responded by saying that policy costs could not explain the prices rise.
A spokeswoman for the Department for Business, Energy and Industrial Strategy said:
"Energy firms should treat all their customers fairly and we're concerned this price rise will hit many people already on poor value tariffs.
"Government policy costs make up a relatively small proportion of household energy bills and cannot explain these price rises."
"In response to a letter from the Business and Energy Secretary asking what action the regulator intended to take to safeguard customers on the poorest value tariffs and the future of the standard variable tariff, Ofgem has committed to taking prompt action, in consultation with consumer experts, to develop proposals including a safeguard tariff.
"We want to see rapid progress on this commitment."
More than 2.3 million families are living in fuel poverty in England – the equivalent of 10% of households, according to government statistics.
Almost 60,000 households in Birmingham alone cannot afford to heat their homes. The figures from the Department for Business, Energy and Industrial Strategy show the West Midlands city is worst affected, with Leeds, Cornwall, Manchester and Liverpool also in the top five local authorities where households face “eat or heat” choices in winter.
However, rural areas of England are proportionally the worst affected, with more than 20% of households on the Isles of Scilly classified as fuel poor. Other badly affected areas include Eden in Cumbria, Richmondshire and Ryedale in North Yorkshire and West Devon.
The announcement by British Gas follows a string of similar moves by other energy suppliers. EDF Energy, SSE, E.On, nPower and Scottish Power made similar announcements to increase their prices this year. However, many feel the move was ill-timed and highlights the fact that the energy market was out of control.
Labour MP, Alan Whitehead, said: “Today’s announcement shows that the Conservative Government has still not got a grip on the broken energy market, with companies raising prices yet again.”
The move is a blow to the Conservative government. During the election campaign, Theresa May committed that she would introduce a cap on energy prices for households.
Another betrayal by Theresa May's Tories to Million's of families with energy cap pledge U-turn, as British Gas hike up prices by 12.5%. pic.twitter.com/upENSrvaeu— Corbynator (@Corbynator2) August 1, 2017