Centrica, the owner of British Gas, left little doubt that another round of imminent and significant energy bill hikes was in the offing when it said soaring wholesale gas and electricity prices had not receded.
In a one-line statement, the country's biggest gas supplier said trading conditions had not improved since it issued a foreboding trading statement six weeks ago. Last month, the company warned that it would take "necessary action to deliver reasonable margins in the retail business" amid unprecedented prices for the power and gas it buys to supply its customers. The situation has worsened since. Wholesale gas for delivery this winter has soared to 101.78p per therm, more than twice the 47.96p per therm price it reached last year. It is the same story for winter electricity, which is also fetching nearly twice the price – £90.43 per megawatt hour – than it was a year ago.
Industry observers have warned that energy companies will have to increase bills by up to 40 per cent or absorb significant losses. The hikes are expected to start by the end of summer.
It is thought Centrica is more likely to push through increases in the high twenties or low thirties rather than the 40 per cent figures that have been suggested recently. Coming after all of the "Big Six" energy companies pushed through hikes of around 15 per cent earlier this year, rises of that magnitude would push average annual bills close to the £1,400 threshold, a level sure to provoke a renewed debate on fuel poverty and the efficiency of industry competition.
The wholesale gas price, which is used to heat homes and is burnt by power stations to produce electricity, is linked to the oil price, which was trading at just under $132 per barrel yesterday.Reuse content