British Gas profits increase by 570 per cent ... but don't expect a reduction in your bill

British Gas faces a consumer backlash as it prepares to unveil a 570 per cent increase in profits tomorrow.

The announcement will anger customers, many of whom were hit with a 15 per cent surge in bills last month.

The gas company's profits rose from £95million in 2006 to a record £640million last year.

The figures will lead to accusations of profiteering, as many power giants have cashed in on the winter chill with inflationbusting increases.

British Gas is just one of the big six companies which saw their profits increase sharply last year.

Power industry bosses now face a grilling from MPs, who fear the recent price rises have driven millions into fuel poverty.

Around four million households spend more than 10 per cent of their disposable income on gas and electricity.

This means they sometimes have to make a nightmare choice between heating and eating.

Charities fear that spiralling power bills can be a matter of life and death for the elderly.

Pressure is mounting for a windfall tax on the industry to raise money for energy efficiency measures - such as insulating pensioners' homes.

The record profits at British Gas are expected to bolster the results of its parent company Centrica, where annual profits are forecast to rise 40 per cent to more than £2billion.

Gas and electricity suppliers cashed in during 2007 because they failed to pass on the full value of falls in wholesale costs to their customers.

This move allowed British Gas and others to increase their profit margins significantly.

By contrast, the power industry was quick to impose dramatic increases in customers' bills when wholesale costs rose again recently.

The consumer group Energywatch believes that the sector's huge profits are evidence that the energy market is "rigged" against the public.

It is demanding a Competition Commission investigation into concerns that the market has been carved up by the big six - British Gas, E.on, npower, EDF, Scottish Power and Scottish & Southern Energy.

Allan Asher of Energywatch said: "All of these suppliers are going to post huge profits for 2007.

"Our concern is that when wholesale prices go up, they are quick to raise domestic prices - but when they go down, they are very slow to pass the reductions on."

An Early Day Motion in Parliament calling for a Competition Commission investigation into UK energy prices has been signed by 74 MPs.

The motion, tabled by the Labour MP John Grogan on February 4, highlights concerns about a perceived lack of competition in the British market.

Tim Wolfenden, of the price comparison website uSwitch.com, said: "The figures will inevitably cause a row and British Gas will struggle to justify the increases.

"British Gas will need to give robust reasons for the rise in profits, not least that 2006 was a poor year.

"That is acceptable to a point, but customers will see a big increase and they will want to know what is going on.

"Rising prices are really very serious for millions of people.

"The average bill may be more than £1,000, but you have elderly people at home who face much bigger bills simply to keep warm.

"Consumers are not against suppliers making profits, but they feel it is unfair when price rises are coupled with such big increases in profits."

The scale of the increase in British Gas's profits has been exaggerated by the fact the figures for 2007 are being compared with 2006, which was an unusually poor year for the company.

Both the big power supplier companies and the industry regulator, Ofgem, claim that the British market is the most competitive in Europe because families are allowed to switch between suppliers.

However, some 46 per cent Britons - amounting to some 12million homes - have never changed their supplier.

Many of these households are pensioners who are suspicious of changing, despite the fact that they could save more than £300 a year.

The power industry giants also claim that they need to boost profits in order to invest in developing ways to produce "green energy", such as by wind farms and hydro-electric plants.

Centrica is also likely to emphasise that the rising cost of investing in renewable and low-carbon electricity generation - which is necessary to meet tough renewable energy targets set by the European Union - will mean higher prices for consumers.

The company defended its price hikes last month, saying: "In the last six months of 2007, higher wholesale gas prices have reduced British Gas operating margins to around 1 per cent."

Centrica added that at current wholesale prices British Gas "would be loss-making in 2008 without the increase".