The UK is set to experience further energy price hikes next winter. This news comes from Centrica, which is British Gas’ parent company, after it announced that due to unrest in the Middle East and the disaster in Japan, wholesale gas prices have gone up by a quarter compared to last year.

The Japan disaster has meant that the country has had trouble producing enough energy for its people as a result a great deal of liquefied gas supplies have been diverted to make up for the shortfall in power production.

"In the UK the forward wholesale prices of gas and power for delivery in winter 2011/12 are currently around 25% higher than prices last winter, with end-user prices yet to reflect this higher wholesale market price environment," said Centrica.

Due to the rising cost of gas a number of energy suppliers in the UK including Npower, First Utility and British Gas, which has over 16 million customers have already had to increase prices and take away some cheaper tariffs. 

Even though this is not good news for homeowners they can do something now to protect themselves against the hikes and bigger bills during the upcoming winter. Most of the largest gas and electric providers do offer fixed-price tariffs, however suppliers are already increasing prices and withdrawing cheap deals so time is running out.

Homeowners can use sites such as GasBoiler-Buyability.co.uk, Moneysupermarket.com and Uswitch.com to compare the best energy deals on the market.

Although these price hikes are unfortunately unavoidable due to rising wholesale prices they are nonetheless coming at a poor time with record petrol prices and other increased living expenses this is yet another blow to the average household’s dwindling disposable income.

The price hikes are not only affecting domestic users either with businesses set to be hit as well. But the recent Renewable Heat Incentive launched by the government will allow commercial and domestic users later on to receive subsidies and cash back. And with the new price hikes this will surely spur many companies to look at more cost effective forms of energy supply.

The RHI scheme will initially be funded by the government using £860 million and is set to be available to the public and commercial sector as of July 2011. The scheme will provide financial incentives for installing and using renewable energy. This will be done by paying an annual subsidy to the person who owns the installation. The funding will be available for systems such as ground source heat pumps and solar thermal. British Gas has teamed up with Sainsbury’s to promote renewable energy installation by providing advice and information to shoppers. This will help to promote the incentive to the public.

It is predicted that inflation and energy prices could double over the next decade and with the RHI scheme this could mean a new revolution in renewable energy production for businesses and homeowners.

Guest Article by Louise Goldstein

Centrica is the UK’s biggest energy company and owner of British Gas, and it has very obvious mixed feelings when it came to the recent UK budget unveiled by Chancellor George Osborne.

Like most companies in the oil sector, it was particularly scathing that the industry was made to pay for what many believe was a grandstanding tactic when it came to reducing the duty on fuel.

The Centrica Energy Managing Director (who also looks after British Gas) Mark Hanafin said:
“The Budget presents a mixed picture for the UK energy outlook. We are disappointed by the Government’s decision to increase further the already high levels of tax on UK gas and oil production. With more than 50 per cent of Britain’s gas now imported, it is vital for our energy security and for the economy that investment is maintained to ensure we extract all of the untapped hydrocarbons we can. This tax hike could have a chilling impact on future investment in the North Sea.”

The accusation was clear – the Coalition might pay dearly for trying to win cheap political favour and strike at a sitting target.

Yet there was more welcome news when it came to the question of the carbon price and this time, Centrica (and British Gas), has kindlier words to say: 
“However, we are pleased by the Government’s decision to support the UK carbon price from 2013. It is an important first step in delivering cost effective carbon emission reductions by increasing the cost of high-polluting forms of electricity generation. Crucially, it will provide greater financial certainty for the significant investment decisions being made in the next few years.

“While carbon price support is necessary, it is not sufficient on its own to deliver the scale of investment required to meet the UK’s carbon targets and secure energy supplies. It is therefore important that it is seen in the broader context of the forthcoming electricity market reform proposals.”

So, the reaction was definitely mixed and industry observers now await to see the relationship between the energy companies, including British Gas, and the UK Coalition Government will develop over the coming months. Some say this spat will be soon forgotten as the companies will be keen not to rock the perhaps fragile Coalition as it enters the choppier waters of austerity cuts. Others are pointing out that although Labour expanded a lot of hot air about windfall taxes, they were comparatively few levelled when they were in power.

British Gas, alongside its parent Centrica, remains on the sidelines.

Guest Article by Neil Camp 

The horrific events in Japan have had one unfortunate side effect for the Government in the UK: it proves yet again that nuclear power is not without risk.

The Government had warmed to the idea that nuclear power, which currently accounts for around 10% of energy provision in the UK, should play a greater role over the coming years.

Centrica, which owns British Gas, has taken a large stake in the UK’s major provider of nuclear power and French energy giant, EDF, now mostly controls the country’s nuclear energy production.

The nuclear option is extremely tempting for the UK because it allows the country to meet its carbon emission levels (if all goes well, it is one of the cleanest fuels in the world) and also helps mitigate the fact that no longer does the country have large stocks of its own fossil fuels.

The UK has almost exhausted both its own oil and gas reserves, and has now even become a net importer of gas. This is coming from Norway and increasingly, via shipped liquid gas from the Middle East.

The obvious implications for the UK Government on relying on being a net importer of your energy is very clear. It’s population will have to pay more for their energy; individual nations can hold the country to hostage as regards the energy flow (take what happened to the Ukraine when they fell out with Russia) and should a natural disaster interrupt supplies from overseas (or a war situation), then the country will struggle to meet its own energy needs.

So the attractions of a clean fuel such as nuclear fission is obvious to see, but the industry doesn’t have a long term PR clean sheet. Just mentioning names of Chernobyl and Three Mile Island are enough to send environmentalists mad with anger.

There are two big problems with nuclear power. The waste product is extremely dangerous and can have a shelf life of hundreds of years and, if something should go wrong with the actual process – as just witnessed in Japan – then it becomes very quickly an unstable energy generating process. And far from the problem being contained within a stone’s throw of the energy plant, the implications of having radioactive waste in the atmosphere and able to travel thousands of miles, is not worth thinking about for most people.

Ironically, the nuclear power solution has had a superb track record of late. The industry is far more aware of the power it has to harness and the modern stations are light years away from the flawed design in Chernobyl.

Yet even so, if Japan cannot eventually contain it, which country can. When a nuclear reaction cannot be cooled, it enters meltdown which can have catastrophic effects.

Now the UK does not sit in a earthquake zone, but there are worries that the same problem now faced by the Japanese could also occur through another natural disaster scenario (say a major storm), or indeed, perhaps more frighteningly, a major terrorist attack.

Whatever happens in Japan, the ugly side of nuclear power has again raised its head and that will once again give the nuclear doomsayers a chance to say nay to what is the Government’s great white hope for future energy sustainability.

Guest Article by Neil Camp

Centrica has expanded British Gas Insulation with the acquisition of ECL Contract Ltd.

Centrica wants British Gas Insulation to be the largest of its kind in the UK and this latest acquisition is a key part of their growth strategy.

ECL Contracts specialises in external wall insulation and cost Centrica £4 million in cash. By adding the specialist skills of the ECL team, Centrica believes it will add to their ability to help British Gas customers cut their energy usage, carbon emissions and fuel bills. Before this acquisition, the main skill set of British Gas Insulation was loft and cavity-wall products.

Rugby-based ECL has 31 staff and markets its services to the roughly nine million homes in the UK which are of solid-wall construction.

British Gas reckons that the next five years will see a dramatic rise in the demand for home insulation, especially as the figures show that currently for every £4 homeowners spend on domestic energy fuel bills, around 25%, £1, is completely wasted due to bad insulation.

At the moment, some £0.6 billion is spent on home insulation which is set to rise to £1.4 billion in 2015. Apart from the economic incentives to improve house insulation, the Government has a number of incentives in which to actively encourage people to insulate their homes. This includes the Green Deal.

Managing Director of British Gas New Energy Jon Kimber said:
“This acquisition is part of the continuing success story of the British Gas insulation business. At British Gas, we are building the country’s leading insulation business, reducing household carbon emissions, and helping our customers lower their energy bills. The insulation market is growing, and insulating homes is the cheapest way to reduce energy bills. ECL Contracts Ltd, like British Gas, has a real passion for great customer service, and we are delighted to have secured the skills of such a great team.”

Managing Director, ECL Contracts Malcolm Smith said:
“This is great news for ECL Contracts and a reflection of the hard work and skill of all our people. I joined ECL Contracts 14 years ago and I’ve seen the company go from strength to strength. We are now starting a new chapter and are thrilled at being part of one of Britain’s most successful companies.”

Centrica believes that its growth of British Gas Insulation will make it the leader in the home insulation market and together with its position as number one with energy efficiency and microgeneration products, will give its customers a complete energy solutions package.

British Gas is also organically growing its insulation business which will eventually employ over 1,000 employees. In 2009 alone, it completed well over quarter of a million installations involving insulation products. The Company has calculated that that level of profits saved its customers over £30 million from their fuel bills.

Guest Article by Neil Camp 

Energy suppliers in the UK are having to cope with a transformation in their sector says Chief Executive of Centrica Sam Laidlaw.

Mr Laidlaw should know, as Centrica owns British Gas, one of the main energy suppliers in UK. Comparing this new transformation to the dramatic change in the markets in the 1990s, Laidlaw emphasised that the new challenges the energy sector faced were climate change and energy security, and that it was these two challenges that would push the sector to change so drastically.

Energy services, Laidlaw claims, will soon be just as big as the energy supply business, and that British Gas and other energy companies and services will have to change around this ‘new model’. ‘The old utility business model is dead’, Laidlaw declared. Focusing on this new transformation, Laidlaw also announced £30 million of funding from British Gas to go to the proposed Green Deal; a government idea that would try to ensure customers’ homes are more energy efficient. This money would ‘go early’, without waiting for the legislation to go through government.

Laidlaw explained: "Cutting carbon emissions from power supply alone is not enough and a greater focus must fall on energy efficiency. The focus is switching from delivering units of energy, to ensuring a well lit, warm and energy efficient home. The Green Deal has the potential to transform Britain’s housing stock. What’s needed now is to see the scheme up and running as quickly as possible. And if it is to truly transform our homes, it needs to capture all the technologies available, from insulation to microgeneration."

Laidlaw aims to cut the average carbon footprint by one third in British homes within 10 years, through more energy efficient measures being more widely applied and decarbonising the electricity supply.

It is no surprise that the Energy and Climate Change Secretary , Chris Huhne, is pleased by such thinking: "It’s great that British Gas is backing the Government’s Green Deal and investing £30 million to insulate their customers’ homes, helping them cut carbon emissions and energy bills. Once the full Green Deal is in place from 2012 we hope more consumers will benefit from a range of firms, kick starting a massive and long overdue improvement in home energy efficiency."

So energy suppliers in UK will have to change their thinking and their ways of thinking to secure low carbon affordable energy, if Laidlaw is to be proved correct.

Finally, he urges all involved in this business, including government, to work together to ensure that the change in energy service as we know it is a smooth and effective one.

Guest Article by Neil Camp