'Rip-off' inquiry over fuel bills

FAMILIES are facing massive increases in their power bills as fuel suppliers are accused of ripping off British consumers.

Already under fire for passing spiralling petrol costs on to motorists, oil companies are now planning to add more than £115 to the average family's annual gas and electricity bill.

Soaring costs have already prompted regulator Ofgem to launch an investigation into claims of profiteering by the big fuel companies.

The 20% rise comes because the few multinationals that produce natural gas - including BP, Shell, Total and ConocoPhillips - have hiked up the wholesale price. Electricity bills will also be hit because much of Britain's supply now comes from gas-fired power stations.

The news comes only six months after British Gas, the country's largest supplier, raised prices by 6% for its 12.5 million customers.

Unlike the petrol hikes, the new rises cannot be blamed on the war in Iraq. There are plentiful supplies of gas and demand is relatively low.

Jeremy Nicholson, director of the Energy Intensive Users Group, said: 'Wholesale gas prices have risen 40% since last year and this has already led to huge rises for large industrial users. Domestic consumers will be affected to a lesser extent but will still face increases of nearly 20%.'

Powergen chief executive Paul Golby has warned that electricity prices could go up by that amount for his six million customers and Ian Marchant, chief executive of Scottish & Southern Energy, also warned of 'petrol pump-style' increases.

'It's relatively easy for three or four players to create the market they want,' he said of the oil giants.

After receiving complaints from industrial users, Ofgem chief executive Alistair Buchanan said: 'This price rise does not seem to be justified by market conditions. We will be examining why, when demand was not particularly high and supply was not low, we have still seen prices go up.'

Ofgem is expected to publish its results in about a month.