Gas bills set to top £1,000

Gas bills will rocket from an average of £600 to more than £1,000 a year within months, families were warned today.

The forecast came after a sudden surge in the wholesale gas price which will make 'catastrophic' increases in domestic bills unavoidable.

Mark Todd, director of website energyhelpline.com, said: "If this year's rises weren't bad enough, gas prices are set to get much, much worse. Wholesale gas prices are double what they were this time last January.

"We all know this will have a gigantic impact and if these increases are passed to the consumer in their entirety, the UK could be facing a whopping 64 per cent rise in gas prices."

Energy companies are expected to start passing on their higher costs from the autumn to protect profitability.

The expected increases represent another headache for Gordon Brown who was today in Aberdeen with Alistair Darling urging oil and gas companies to use their vast profits to increase investment in exploration.

The wholesale price of gas for the coming winter hit a record 99.5p a therm last night and was today hovering around 97p, twice the level of a year ago.

If these prices are passed on to consumers the average gas bill will rise from £665 to £1,091, the first time it has been more than £1,000. As recently as 2002, the average bill was around £320.

Wholesale electricity is also trading at close to twice last year's level, making big jumps in bills also a near certainty. Total household

energy bills are expected to rise to more than £1,500 by early next year compared with around £1,050 now and £662 in 2005.

The latest surge in the wholesale price of gas has been caused in part rise in the oil price to which gas prices are often linked. However, other
factors such as a shortage of supply through gas pipelines from Norway and Holland have exacerbated the problem. The threat of a full-scale energy crisis this winter was underlined by power cuts around the country yesterday when two large power stations failed and five others were partially knocked out.

A spokesman for consumer group Energywatch said: "It's going to be pretty catastrophic. There has already been lots of talk and preparing the ground for price increases from the energy companies so it's an inevitable fact. But we need it stated much more clearly exactly what is the relationship between wholesale prices and domestic prices."

MPs on the business and enterprise select committee are investigating claims that the market is rigged by the big six energy suppliers, four of which are foreign owned. David Hunter, energy analyst at consultancy McKinnon & Clarke, said: "The Government's inability to make long-term energy security decisions over the last decade is coming home to roost. Since the 'dash for gas' in the 1990s, the lack of political will to make tough decisions has left Britain short of power."