British Gas bills are set to rise by 7% on 10 December, 2010.

The news was not unexpected and the British Gas bills for both gas and electricity are affected. It effectively means an extra £1.50 a week for a typical dual-fuel deal.

The energy giant has over eight million customers and has stated that, initially, its most vulnerable 300,000 customers will not see any increases until at least 1 April, 2011.

The company, which is the second one to announce major increases, blames the rises on the dramatic rise in wholesale prices. They state that these have risen by 25% since spring of this year. The first company out of the starting gate to announce winter fuel rises was Scottish and Southern Electricity, which also blamed wholesale price increases for its hike by nearly 10% of its domestic gas tariffs.

The managing director of British Gas Phil Bentley said: "We know that rising energy prices come at a difficult time for many.”

Another UK energy giant threw a small spanner in to the works by stating that it would actually freeze residential gas and electricity prices until at least March 2011.

Comments came thick and fast from consumer groups including Uswitch, whose spokesperson told the BBC:
“After a two year lull, household energy prices are about to resume their steady climb upwards again. Unfortunately for consumers, the 8% or £99 reduction seen over the last two years failed miserably to reverse the impact of the 42% or £381 increase seen in 2008. And now, whatever small benefit was seen is about to be wiped back out again.”

Adam Scorer, from Consumer Focus, said:
“British Gas and other suppliers respond to forward energy prices, and that will be their argument that price rises are needed," said Adam Scorer, from Consumer Focus. However, wholesale prices are around half of their peak in 2008 and yet in the same period customers prices were cut by less than 10%. Consumers will feel that suppliers did not make cuts when conditions allowed it, but are covering their profit margins as wholesale prices nudge up. At a time when there are reports of a gas glut it seems that consumers take on all the risk in this market.”

However, the Bank of England did predict, in its recent Inflation Report, that domestic gas prices would rise on average 10% by the end of 2010. This was one of the main reasons for the bank’s higher than expected inflation forecast for 2011.

Guest Article by Neil Camp

Those worried that gas charges are increasing as it becomes the energy of choice (mainly because alternatives are so limited), might be pleased to hear that the nuclear option is starting to gain momentum.

But whether people see the increased number of nuclear power stations as the way to counter forever mounting gas charges, or are more concerned about the potential dangers of nuclear energy, remain to be seen.

The government has identified some eight sites in England and Wales which are suitable for the future – ironically at the same time as announcing the worst austerity measures for decades. Three sites were ruled out because of environmental reasons. Those kicked out were Dungeness in Kent, and Braystones and Kirksanton in Cumbria.

Chris Huhne, Energy Secretary and no doubt with one ear tuned to the electorate who don’t like nuclear power stations following such infamous incidents as Chernobyl and Three Mile Island, tempered his announcement on the future of nuclear power by saying that he hoped that half of all new capacity by 2025 would come from renewables.

But, that hope seemed somewhat forlorn as he also ruled out plans for a massive tidal energy scheme on the Severn estuary because of the cost. Some observers say that talk may be cheap, but coming through with concrete proposals is proving too expensive and worry about the future of many other renewable projects.

The previous administration had already identified 11 locations for new nuclear power stations (mostly adjacent to existing sites), but the Tories have opted for eight instead.

Top of the favourite list of locations are: Bradwell-on-Sea, Essex; Hartlepool; Heysham, Lancashire; Hinkley Point, Somerset; Oldbury, Gloucestershire; Sellafield, Cumbria; Sizewell, Suffolk and Wylfa on the Isle of Anglesey.

For nuclear power fans there is a sting in the tale though. Minister Huhne said that there would be no public subsidies (effectively saying it would be down to private sector energy companies to foot the bill) and that all the locations would be subject to local and national planning permission.

Mr Huhne also admitted he was frustrated with the battle between those supporting renewable and those pushing forward the nuclear option. He said:
"I’m fed up with the stand-off between advocates of renewables and of nuclear which means we have neither. We urgently need investment in new and diverse energy sources to power the UK. We’ll need renewables, new nuclear, fossil fuels with carbon capture and storage and the cables to hook them all up to the National Grid as a large slice of our current generating capacity shuts down. I am making clear that new nuclear will be free to contribute as much as possible with the onus on developers to pay for the clean-up.”

Guest Article by Neil Camp 

nPower gas customers are due for a refund of around £35 each.

It’s reckoned that some two million homes are due for the largesse after they had been overcharged for gas in the first place. The nPower gas refund is thought to be costing the company around £70 million in what is the biggest energy compensation package of its kind.

The over-charging dates back to 2007 and concerns the way it charged customers for their gas. Much of the problems relate to how the energy giant communicated with their customers.

nPower gas refunds will start to reach customers in the next two months.

The problems dates back to around three years ago when nPower began a scheme whereby it charged its customers for a fixed monthly number of gas units. These were called primary block units and were initially more expensive that the previously primary units which varied depending on the time of year.

The nPower is then said to have lowered their prices and started to introduce discounts, but, some customers who didn’t use much gas, found themselves still being billed for the standard number of primary units, which of course meant they were paying for gas they weren’t using.

This began to cause confusion, initially denied by nPower, which countered by saying that most of its customers were benefitting from cheaper gas. But an investigation by the industry’s regulator, Ofgem, caused nPower to stump on average a £6 refund for around 200,000 customers.

A nPower spokesperson said:
“Although the vast majority of our customers benefited from the combined effect of the changes, some, who were low users of gas, did not.”

But a number of consumer watchdogs did not agree and nPower was ‘forced’ into conducting a thorough investigation, and then agreed to make refunds worth between £1 and £100 (on average £35) to nearer two million customers (whether existing, or former).

A statement from nPower said:
“Although the vast majority of our customers benefited from the combined effect of the changes, some, who were low users of gas, did not. We are sorry that the complexity of the changes we made caused confusion. We are now doing all we can to improve our communication with customers.”

All customers should receive notification of a refund, if they are eligible, by the end of November. Any refund will be in the form of a letter that can be cashed at a Post Office.

Mike O’Connor, who heads up Consumer Focus, said:
“Consumer Focus has worked closely with Npower to ensure that refunds are made fairly and that no customer loses out. A huge amount of work and collaboration has resulted in the right thing being done by Npower for its customers and we welcome this. It has been an great example of how consumer organisations can work with industry to deliver a fair deal for consumers.”

There are a number of nPower gas customers not eligible for the refund, including those that buy electricity, gas pre-payment meter customers, 2009 Price Fix tariff customers, Gas Guardian tariff customers, Tracker tariff customers, Sign Online v8 tariff customers and 1st steps customers; and, business customers. Also those with a debt greater than the compensation due are not eligible.

Guest Article by Neil Camp 

There’s a new gas supplier in town and the raw material is human waste.

And although it’s a new gas supplier, there’s some familiar faces behind the project. British Gas, Thames Water and Scotia Gas Networks are hoping to introduce the project to more locations throughout the country.

Residents of Oxfordshire village Didcot are the first to use gas from their own ‘poo’ to power their cookers and heating systems.

The gas is called biomethane and is a clean gas manufactured from the discharges of human waste.

The gas is extracted from the waste and then goes through a number of cleaning processes before being pumped into the national grid.

Although regarded by some as a novelty, there is a real motivation behind such projects as a EU directive has stipulated that 15% of the UK’s energy must come from renewable sources by 2020.

And this has become a priority for British Gas whose head of energy, technology and innovation, Martin Orrill, said that the Didcot project, as well as other ones like it, are a natural step to making full use of renewable resources. As to whether the residents of Didcot might be perturbed by the use of human waste gas, he said:
“They will not notice any difference as the renewable energy source has no odour, and the infrastructure to deliver the gas is already in place.”

The human waste to useable gas process makes use of existing anaerobic digesters which already exploit bacteria to generate electricity, but now also removes a by-product called biogas which is then turned into biomethane. The cycle of the process from flushed toilet to gas into the grid is only 23 days.

British Gas has installed the collection and cleaning equipment at the Didcot sewage works operated by Thames Water. Around £2.5 million has been invested in the scheme.

Chris Huhne, the Energy and Climate Change Secretary, said:
“This is an historic day for the companies involved, for energy from waste technologies, and for progress to increase the amount of renewable energy in the UK.”

Experts point to the project as a great example of what can be achieved with clean technology, although it’s admitted that it’s still on a very small scale. Figures suggest that if all of the country’s sewage plants were fitted with such equipment (and there nearly 10,000 plants currently operating), then the resulting renewable gas would only be enough to power 350,000 properties. This is based on the fact that the country produces nearly two million tonnes of sewage every year, with the average person contributing 30kg every 12 months.

There is also some debate as to the financial validity of this new gas supplier, with the Department of Energy and Climate Change being quoted as saying:
“Clearly there are benefits to the scheme, but we must also consider the impact of the cost, particularly given the financial constraints we must work within and the potential impact that funding options could have on vulnerable people.”

Martin Baggs, chief executive officer at Thames Water has the last word:
“Every sewage works in Britain is a potential source of local renewable gas waiting to be put to use.”

Guest Article by Neil Camp 

Centrica, which owns gas energy suppliers British Gas, has announced that it is to acquire the non-operated interests in the oil and gas Statfjord field from A/S Norske Shell and Enterprise Oil Norge AS (Shell).

British Gas is one of the UK’s largest gas energy suppliers and this deal by its parent company means that Centrica will gain 172 billion cubic feet equivalent more of gas and oil reserves in 2010; an increment of 70 million cubic feet per day of natural gas and oil production.

The total amount of cash changing hands was NOK1,370 (£144 million), with additional field development costs suspected to sit at around £100 million, and will be required over the next three years. Centrica’s increase in equity share gives them the opportunity to get their hands on long term sources of gas production, as well as some appealing rates of return.

Centrica’s equity interest in Statfjord currently stands at 9.69%, but this will double to 19.13% when they garner another 9.44% through the deal. As for the specific producing fields, Centrica will get 5.52% in Statfjord East, 11.04% in Statfjord Nord, and 6.07% interest in Sygna.

"This is an attractive transaction that builds on our existing knowledge of the Statfjord field and represents a further step in our strategy to grow and deliver value from our upstream business. It also increases our level of gas reserves to supply British Gas customers and underlines our continued commitment to invest in North Sea production,” said Mark Hanafin, Managing Director of Centrica Energy.

Centrica understands the importance of forward planning, so has to keep its subsidiary company well fed for the future, to maintain the position of British Gas as one of the nation’s key energy suppliers, it has to make major investments in terms of reserves. This is likely to be one of a number of similar deals which Centrica will commit to over the coming decades.

Guest Article by Neil Camp