British Gas set to hike prices

ENERGY prices are on the way up for 16m customers of British Gas as parent group Centrica today gave an unequivocal warning that it will increase bills later this year.

But Centrica also said that its profits will be hit as it continues to lose customers at an average of more than 17,000 a week.

In a trading statement ahead of the end of the half-year, the company said it expected wholesale gas prices to go up to 41p a therm in the second half, 51% more than a year ago, while wholesale electricity prices are running on average at £35 per megawatt/hour, up 43% year-on-year.

While that is good news for Centrica's lucrative upstream activities, it warned that the cost of supplying household electricity is also rising.

'This will lead to lower margins downstream in the second half and the necessity for further increases in retail energy tariffs,' it said.

Consumer group Energywatch said that the worst-off householders will be hardest hit. The group said wholesale gas prices this year were expected to be 51% higher than a year ago and more than the 44% rise predicted at its annual meeting last month.

A spokeswoman for Energywatch said the consumer group was braced for a rise in energy bills. 'There comes a point where consumers can't bear any more,' she said. 'Any price rise will have a terrible impact on low earners and vulnerable people.

'It may be time for companies to think about social tariffs and particular ways of helping the vulnerable.'