Warning on price hike by gas firms

HOUSEHOLDS have been warned that energy suppliers are preparing to follow Scottish & Southern Energy's lead in unveiling higher bills over the coming weeks.

SSE last week revealed gas bills will go up by 9.4 per cent on 1 December, adding 65 to its average annual gas bill just as the winter freeze sets in. The supplier was the first of the big six to announce a general price rise since 2008, when several rounds of increases saw household energy bills soar by a third.

SSE claimed the increase reflected higher forward wholesale gas prices - which have risen 25 per cent since March - and losses incurred on its gas supply business. But Joe Malinowski, of comparison website TheEnergyShop.com, questioned whether the rise was justifiable. He said that while wholesale prices were rising, they remained only half the peak level of two years ago, with the gap between wholesale prices paid by suppliers and customers' bills still at historically high levels.

However, he noted SSE did make a loss on its gas business last year. British Gas was the only supplier of the big six to make a decent profit, suggesting further gas price increases are on the way. "Based on our analysis, the jury is still very much out on whether the SSE gas price increase is justified," said Malinowski. "However, justifiable or not, the fact is that it is going to happen and at least some of the other suppliers will follow."

He urged households to investigate before prices rise.

"Anyone on a standard tariff, and particularly SSE customers on standard tariffs, has little to lose, and potentially a lot to gain, by switching to a fixed deal with a different supplier."