British Gas today confirmed that prices for its domestic gas and electricity will rise by an average of 6% from Nov. 16.
The Centrica subsidiary added that it faced rising wholesale prices, as well as higher costs to upgrade the national grid, and to deliver the government's policies for an "energy-efficient Britain."
Phil Bentley, managing director of British Gas, claimed:
Britain's North Sea gas supplies are running out, and British Gas has to pay the going rate for gas in a competitive global marketplace. Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers' homes, and the costs of the Government's policies for a clean, energy efficient Britain are all going up.
We need an energy efficiency culture in Britain today; rising prices don't have to mean rising bills. We are offering a huge amount of help to customers to help them cut the amount of energy they use and keep their bills under control.
Bentley also claimed around 85% of costs behind the average British Gas "dual fuel" bill were "largely beyond" the company's control.
He also reckoned that, despite the increase in prices announced today, profits at British Gas Residential in the second half of 2012 were likely to be around 15% lower than for the same period of 2011.
Still, Centrica's half-year results published in August showed some 9 million gas accounts and 7 million electricity accounts generating an aggregate £345 million profit -- up 23% on last year.
The half-year results also showed total profits of £737 million and a shareholder dividend lifted 8% to 4.62 pence per share.
Indeed, perhaps the money raised from higher gas bills will be passed on to shareholders in the form of higher dividends.
Centrica's dividend has been lifted 55% since 2006 and City experts reckon the annual payout could be increased by 6% to 16.4 pence per share for 2012 and by a further 6% to 17.5 pence per share for 2013.
Centrica's shares currently trade at 332 pence, and therefore may deliver an income of 5% or so over the next year based on the aforementioned payout projections. For now at least, a 5% dividend income is much higher than the interest offered by most standard savings accounts.
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