BG’s price hike is fat in the fire

Like a pantomime villain whose ignominy has been exposed in the denouement, British Gas is facing a barrage of hisses, catcalls and brickbats from its audience.

Its crime? To have raised consumer gas prices, in two successive years, well above the rate of inflation – this time round in the middle of the peak period, winter.

Now, it’s true that wholesale gas prices doubled during the period 1999 to 2000 – making some sort of margin-preserving reaction inevitable. But the blatancy with which BG has responded, so soon after the dismantling of price regulation, has led critics to rejoice once more in that old sobriquet, ‘Big Greedy’. RIP all that careful brand re-engineering over the past few years, not to mention some considerable successes on the customer relationship side.

Worse may follow. The Consumers’ Association, still euphoric after its joust with the UK car industry, is hoping to gain new laurels with a much publicised price-bashing campaign centred around a BG consumer boycott. And what a gift this will be for BG’s main competitor, npower. Itself something of a pantomime villain, judging from the number of consumer complaints lodged against it, npower now has the perfect excuse to recast itself as a kind of Goody Two-Shoes. It has not been slow to seize the opportunity, with a pledge, backed by a major TV campaign, to freeze prices during the winter period.

Note the absence of a long commitment to pegged prices here. Note also that a number of BG’s rivals, such as Powergen and London Electricity, have used BG as camouflage to sneak in their own price rises, without engendering public hostility or media interest. But arguing that its rivals are opportunistic (they are) or that BG is no worse than its competitors (it may not be) will offer little relief to the hard-pressed utility company. The size of its market share (at 67 per cent, it is unequivocally leader) has a gearing effect on its public actions. Which means that it is particularly vulnerable when – as in the present case – it cocks things up.

As a public relations exercise, it is difficult to imagine how the latest round of price rises could have been more insensitively handled. Has BG, perhaps, taken a leaf out of the railway management manual? Where train operators are concerned, anything seems to go – even ten per cent annual price rises. But however irate and exasperated railway passengers may become, the important point is that they don’t really have a choice. They must grin and bear it. Gas consumers are in a very different situation.

There is a sense about BG, rather like those restored Bourbon monarchs after the French Revolution, that it has forgotten nothing and learned nothing. Look what happened to them.

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