British Gas is preparing to hit millions of families with a hike in energy prices of up to 10 per cent that could add more than £100 a year to bills.
The announcement by the country’s biggest supplier could come as soon as October. The rise means that a typical British Gas annual “dual fuel” bill would hit a record level of £1,474 a year.
The Shadow Energy Secretary, Caroline Flint, said: “Soaring energy bills are causing a cost of living crisis. Hard-pressed consumers will not understand how the energy giants can get away with more inflation-busting price rises when they are already making huge profits.”
Energy experts have been predicting an autumn price rise, triggered by soaring costs, for several weeks and the other “big six” suppliers are thought likely to push through similar increases.
This is despite figures from the regulator Ofgem revealing that the suppliers – British Gas, SSE, EDF, E.ON, ScottishPower and npower – have seen profit margins per customer almost double. Though a hike is yet to be announced, it is thought the German-owned npower could raise prices first.
The suppliers often play a game of cat and mouse, waiting for a rival to be first to increase prices and attract the worst of the headlines. British Gas is expected to wait until after the party conference season to make its announcement. One expert described energy tariffs as “a volcano about to erupt”.
Mark Todd, of the energyhelpline.com comparison website, said the higher tariffs meant families could be spending as much as £20 a day on gas and electricity on cold days this winter.
Ann Robinson, director of consumer policy at uSwitch, said: “A price rise will create wholesale misery, and is it really justified? My great worry is if one puts up prices, they all follow. Meanwhile, pay is falling behind inflation, household finances have got more difficult and a price hike will really mean a lot of misery for a lot of people.”
Last winter, almost 70 per cent of households went without heating at some point in a bid to keep energy costs down, according to uSwitch. A 10 per cent price hike would be almost four times the current rate of inflation, which stands at 2.7 per cent. The average British Gas bill is currently £1,340, meaning a 10 per cent rise would lift the cost of heating and lighting the average home to £1,474 a year.
The British Gas move comes despite its parent company Centrica posting a 9 per cent increase in operating profit to £1.58bn for the first half of its financial year, which was part-funded by its decision to add another 6 per cent to customers’ bills ahead of last winter.
British Gas said it “never comments on future pricing movements”.