Millions face major jump in energy bills

Set for price rise: British Gas

Millions of families are facing another jump in household bills after it was reported that UK's largest energy supplier plans to hike its tariffs.

Centrica-owned British Gas, which serves about 12 million homes, is preparing to announce as early as tomorrow that it is increasing electricity and gas charges in the high single percentage digits, the London Evening Standard reported.

The average British Gas annual dual-fuel bill for gas and electricity currently stands at £1,260 - meaning a 5% increase would add £63, while an 8% rise would put on £100.

A British Gas spokesman said: "We do not comment on future pricing movements. We do not comment on speculation about future pricing movements."

The report comes as rival SSE prepares to increase tariffs by 9% on average on Monday, hitting about five million electricity customers and 3.4 million gas customers.

British Gas put gas and electricity tariffs up by 18% and 16% respectively in August 2011, blaming higher wholesale costs, but this was followed by a drop of 5% in electricity tariffs in January when prices eased.

The supplier is expected to say it was forced into the move by higher wholesale prices and the rising cost of using the National Grid network.

British Gas warned in May that its costs were rising, with wholesale gas prices 15% higher for the coming winter and other charges set to add around £50 to the cost of supplying the average household this year.

But the division provoked outrage in July after it unveiled a 23% leap in profits, admitting last year's hefty price rises helped it pull in £345 million in operating profits in the first half of the year.

Commenting on speculation that bills were set to increase again, Caroline Flint, Labour's shadow energy and climate change secretary, said people will "not understand why British Gas are putting prices up".

She said: "Unless ministers get to grips with spiralling energy bills, people will rightly think that this Government is completely out of touch with families and pensioners struggling to make ends meet."

Other big suppliers - including EDF, Scottish Power and nPower - are not expected to follow suit and announce higher prices. E.ON is the only supplier to guarantee a price freeze for 2012.

Further utility bill increases will play havoc with the Bank of England's inflation forecasts, which predicted a gradual slide in the consumer price index rate towards the end of the year and into 2013.

While inflation has fallen from 5.2% in September last year to 2.5% in August this year, many economists expect the rate to rise again as droughts in the US are likely to mean higher food prices.

PA