British Gas Residential Energy Price Changes

Centrica PLC
                  

British Gas Announces Residential Energy Price Changes

British Gas today announced that, in response to record levels of wholesale gas
prices, it is to raise residential prices by 12.4 per cent for gas and 9.4 per
cent for electricity.

The new prices take effect from 20th September, 2004, and come at a time when
the average wholesale price for gas in 2004 is up by 28 per cent on 2003, with
forward prices showing a further rise of 25 per cent for 2005. In electricity,
average wholesale prices for 2004 are 22 per cent higher than 2003 with 2005 up
by a further 28 per cent (1).

The new prices will mean an extra seven pence a day on electricity bills and 13
pence a day on gas bills for the average domestic customer (2). Allowing for
inflation, UK gas and electricity prices are still cheaper today than when
competition was introduced (3).

Mark Clare, British Gas Managing Director said: 'The UK energy industry has
never faced such high wholesale gas prices - looking forward the price for 2005
is more than 50 per cent up on 2003 prices. We have absorbed as much of these
additional costs as we could, but unfortunately we now have to pass a proportion
of them on to our customers.

'Depletion of the North and Irish Sea gas reserves, the UK's consequent need to
import larger volumes of gas and high oil prices are pushing up wholesale
prices. The era of cheap UK energy is over but we have confidence that the
investments we are now making in future energy supplies will, in the long term,
put downward pressure on commodity costs for the benefit of all our customers.'

Clare added: ' We are clearly very sensitive to the impact these changes will
have on customers. British Gas has pledged £10 million to set up an independent
fund to assist those customers who need help paying bills. In partnership with
Help the Aged, we have also developed a package to cap energy bills for
vulnerable older customers. This will give them peace of mind that their
electricity and gas bills will not increase over the next three years (4).' 

Centrica, the parent company of British Gas, has already announced its intention
to spend £4bn on securing new sources of gas and electricity for its British Gas
customers as the UK moves to a position where approximately 75 per cent of its
gas requirements will need to be imported by 2015 (5).

In addition, Centrica has agreed long term supply deals worth almost £12 billion
with Gasunie, Statoil and most recently a fifteen-year LNG deal with Petronas.
These deals are already helping to underpin new infrastructure projects,
including pipelines and LNG terminals to ship gas from around the world to the
UK.

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Notes to Editors

(1) Wholesale gas price data based on International Petroleum Exchange (IPE)
Natural Gas Monthly Index and forecast prices from IPE trading. Electricity
price increases based on Spectron Power Monthly Index (SPI) and forward prices
from the Heren Report.

(2 )These figures are based on an average of the following payment methods for
both fuels: Quarterly Cash or Cheque later than 10 days after the bill issue
date, Monthly Direct Debit and Prepayment. This is calculated at an average
annual consumption of 20,500kWh for gas and 3,300kWh for single rate
electricity, and including VAT @ 5%.

(3 )Based on the average annual gas bill at a consumption of 20,500 kWh, across
monthly Direct Debit, Quarterly Cash/Cheque standard and prepayment pay methods,
between February 1996 and September 2004. Includes VAT. Based on the average
annual single rate electricity bill at a consumption of 3,300kWh across all
regions and payment methods, between September 1998 and September 2004. Includes
VAT.

(4) The independent fund will award grants to individuals to cover the payment
of British Gas energy bills and other essential household bills. Full terms and
conditions apply. The Help the Aged package will apply to those in receipt of
pension credit and will cap energy prices until October 2007.

(5) Wood Mackenzie - 'From Surplus to Shortage? The outlook for Britain's gas
and power markets', June 2004.