Gas bills set to rise, warns SSE

Britain's third-biggest energy supplier, Scottish and Southern, warned yesterday that an increase in domestic gas bills was inevitable if wholesale gas prices remain where they are now.

Britain's third-biggest energy supplier, Scottish and Southern, warned yesterday that an increase in domestic gas bills was inevitable if wholesale gas prices remain where they are now.

The company, which has 6.1 million customers including 1.9 million gas users, said it would have no option but to increase gas prices for a second time this year if the cost of supplies did not come down.

Scottish and Southern pushed through a set of price rises in March, putting up gas bills by 9.3 per cent and increasing electricity charges by 3.7 per cent in Scotland and 6.5-7 per cent in England and Wales.

Ian Marchant, the chief executive, said the company would stand by its pledge not to raise electricity prices before the start of 2006 but could give no guarantee on gas bills. He said if it did choose to raise prices, the increase would probably not take place until October.

Centrica, the owner of British Gas, said this month that higher bills were inevitable but declined to say when and by how much they would rise. The forward price of wholesale gas for delivery this winter is 57p a therm compared with 45p a year ago. Mr Marchant said if prices stayed at that level then all six big energy suppliers would be forced to raise domestic prices.

Underlying pre-tax profits rose 17 per cent last year to £715m, enabling the company to lift its dividend by 12.7 per cent to 42.5p for the year - more than the market had expected.