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British Gas price rise: a good day to bury bad news?

by Tom Lyon

With the entire world’s media all focused on the sudden and dramatic fall of the News of the World after 168 years of publication, some are questioning whether British Gas might have seen this as a golden opportunity to bury bad news about price hikes.

But does today’s announcement represent damage control tactics on their part or simply one of life’s coincidences?  Ultimately only British Gas knows the answer but that shouldn’t prevent us from enjoying a few minutes of speculation…

As many, many people have said – mostly far smarter, wittier and more clichéd than me – hindsight is a truly wonderful thing and looking back there were a number of signs suggesting that today was a likely day for a British Gas price rise.

British Gas has been openly hinting at the need to put prices up for several months now, not least in a statement at the end of June when they indicated a 50% drop in profits in the first half of the year and the need for ‘retail margin recovery’, so we knew a hike was coming.

With this in mind, Centrica, British Gas’s parent company, will be announcing its half year results at the end of the month and this price rise needed to come before that to reassure shareholders worried about a fall in profits.

Add to that the trend that price rises tend to come on Fridays and we are down to a choice of two or three likely days in July.  The upshot of all this is, in hindsight at least, today was always one of the most likely days…

One other thing to bear in mind is the huge amount of work that goes into a price rise affecting this many customers  – I heard one industry-insider estimate that it costs suppliers around £1.5 million to change prices on their standard rates.

Whether this is true or not, it doesn’t take much to imagine the mammoth task of sending out millions of letters. British Gas, for example, has 9 million letters it has to print to send to customers, all dated and ready to start sending out on the day.  Now, the News of the World saga has been bubbling for a week or so but it only became huge news yesterday afternoon when its closure was announced.  In my view, anyone who thinks British Gas (or any other supplier) is capable of preparing for a price rise in less than 24 hours is totally off the mark and probably guilty of giving them a bit too much credit!

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