Centrica’s (LON:CNA) British Gas is raising its standard variable tariff, the blue-chip group has said. The company has attributed the price hike, which will affect 3.5 million customers, to rising wholesale costs.
Centrica’s share price has jumped in London in today’s session, having gained 1.15 percent to 149.60p as of 13:29 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.69 percent higher at 7,771.70 points. The group’s shares have lost just under a quarter of their value over the past year, as compared with about a three-percent gain in the Footsie.
Centrica unveils energy price hike
Centrica announced in a statement today that the British Gas standard variable tariff will increase for existing customers on October 1 by 3.8 percent. The hike will take the average bill for a typical dual fuel customer to £1,205, and represents an increase of £44. The company noted that it will contact the 3.5 million customers affected by the move.
“We have today reluctantly announced plans for an increase in our standard variable tariff,” Mark Hodges, chief executive of Centrica’s consumer business, said in the statement, adding that the hike reflected “the sharp rise in wholesale energy costs”.
Today’s update comes after British Gas moved to scrap its standard variable tariff for new customers last year, and offer existing customers better deals.
Analysts on British Gas owner
Deutsche Bank reaffirmed Centrica as a ‘sell’ this month, without specifying a price target on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 161.50p.
Jefferies meanwhile also reaffirmed the group as a ‘buy’ this month, while pointing to downside risks to consensus earnings estimates.