British Gas hits 13 million homes with 15% bill rise

The inflation-busting rises by the country's largest residential gas and electricity supplier, which affects 13 million households, will heighten demands for Chancellor Alistair Darling to launch an investigation into profiteering in the energy industry.

The increases, which come in immediately, reverse last year's cuts and will fuel fears at the Bank of England that consumer inflation is getting out of control.

The rises come only a month before British Gas and parent company Centrica are due to report record profits of up to £2 billion. Profits from British Gas residential operations alone are likely to top £600 million.

Average annual dual fuel bills will go up by £136 a year to £1,051, making the company Britain's most expensive gas supplier again. Prices are 20 per cent higher than Southern Electric's, one of London's biggest suppliers.

The move follows npower and London's big electricity provider, EDF, which slapped double-digit increases on customers this month. It is believed E.On, the country's second largest electricity provider, will follow suit.

This week, industry regulator Alistair Buchanan denied the energy companies were colluding.

Anne Robinson of energy prices website uSwitch said of the British Gas rise: "Today's move wipes out last year's decrease after only eight months of lower prices and shifts British Gas back into its old position as Britain's most expensive gas supplier. Today's hike will leave millions of consumers wondering what this company has done to deserve their loyalty and continued custom in 2008."

British Gas is blaming rising wholesale energy prices as well as the expense of having to invest in new green energy sources.

"We can't absorb the burden of higher energy prices and costs of delivering a cleaner environment. Green energy comes at an increasing cost for us all," said managing director Phil Bentley. "Our energy market is now part of a much bigger picture."

But Allan Asher, chief executive of energywatch, hit back. "Energy price rises are coming in thick and fast and like every other consumer I'm sick and tired of hearing companies try to justify the latest bout of pain they are inflicting on customers," he said.