British Gas profits leap by 500 per cent to £571m, but - guess what? - prices will go up again

British Gas yesterday warned millions of householders to expect even higher fuel bills despite the company's 500 per cent jump in profits.

Chief executive Sam Laidlaw said wholesale gas prices for next winter are running 20 per cent above today's levels.

And he warned that the price of a barrel of crude oil touching 100 dollars in recent days would also force up the cost of heat and light.

The news came as industry regulator Ofgem announced a major investigation into allegations that the energy market - dominated by the "big six" of British Gas, Eon, nPower, EDF, Scottish Power and Scottish & Southern Energy - is rigged against consumers.

All five other major suppliers, several of them foreign-owned, are expected to see a similar profits bonanza.

There have also been claims that British families are increasingly at the mercy of European power giants, which have a strangehold over gas

supplies in the winter months and have been accused of rationing supplies to this country, so forcing up prices and profits.

The threat of yet more price rises will sound alarm bells among the estimated four million Britons said to be in "fuel poverty", which means they spend more than ten per cent of disposable income on keeping warm.

British Gas made profits of £571million last year, an increase of 501 per cent on the £95million of 2006.

Parent company, Centrica saw a 40 per cent rise to almost £2 billion.

Mr Laidlaw, who said price rises are a "last resort", blamed higher bills on Britain being increasingly reliant on gas imports via pipeline from the Continent during the winter.

"Wholesale prices are increasing driven by European prices and we are much more import dependent," he added.

"Unfortunately, Continental prices are very much driven by oil prices. Most is bought under long-term contracts indexed to the oil price."

Looking ahead, he warned: "We see oil prices continuing to move up, we are over 100 dollars now.

"Long term, that is not good news for gas prices. If you look at the current forward wholesale market for next winter, the price is 20 per cent higher than it is today." Scroll down for more...

Critics accused the company of putting the interests of shareholders, who number around 900,000, above the needs of 13million customers.

British Gas put up prices by 15 per cent earlier this year, while dividends paid to shareholders will rise by 17 per cent.

Mr Laidlaw said that 15 inquiries into the energy market over the past five years had failed to show any evidence of price fixing or market rigging.

Ofgem announced the latest inquiry amid fears that the public has lost confidence that the market is working fairly.

Adam Scorer, of consumer group EnergyWatch, said: "No-one is going to argue that energy companies don't need to make a profit.

"However, British Gas customers will want to tear their hair out when they hear the scale of these profits and compare them with their own rising bills."

Liberal Deocrat leader Nick Clegg said: "With 25,000 people predicted to die from the cold this winter, ministers should stop twiddling their thumbs and tackle the scourge of rising fuel poverty.

"The Government must act now to ensure this excess profit, equivalent to £360 per British household, is handed back to the most needy customers through lower energy bills."