Gas and electricity bills set to soar by £100

Energy analysts are warning homeowners to expect average increases of almost £100 on their electricity and gas bills this year after two of the biggest suppliers in the market raised their prices sharply yesterday.

Npower increased its electricity prices by between 9 and 12 per cent, depending on the area where customers live, while its gas charges have risen by an across-the-board 13.7 per cent. Scottish & Southern Energy, which trades using names including Southern Electric, Swalec and Scottish Hydro Electric, put its gas prices up by 13.6 per cent and introduced similar price rises to Npower on electricity.

Both companies blamed the rising wholesale price of gas for their bill increases and warned that rivals would be forced to follow suit.

British Gas, the former state-owned monopoly which is still Britain's biggest supplier of domestic gas, has already indicated that it may have to increase charges early in the new year. Last month, its managing director Mark Clare warned that all gas and electricity providers would increase bills in 2006.

A 50 per cent rise in the price of wholesale gas during 2005 has caused an immediate rise in gas bills, but also has a knock-on effect on electricity prices because gas fuels 40 per cent of the UK's power stations

However, Allan Asher, chief executive of the gas and electricity consumer group Energywatch, attacked the higher charges. "These increases seem to be hard-wired into the system - there is no underlying problem with gas supply and no extraordinary increase in demand," Mr Asher said. "2006 must be the year for major reform of failed European gas markets and greater help for people who cannot afford to heat their homes."

Moneysupermarket, the online price comparison analyst, said yesterday's price increases would add £91 to the average combined gas and electricity bill.

The company's utilities manager, Paul Schofield, said: "Although Npower and Scottish & Southern are the January culprits, many other providers will follow suit - energy customers have little to look forward to in the new year."