British Gas (profits £740m) will add £200 to hard-pressed families' bills

THE owner of Scottish Gas has hiked gas and electricity prices for the second time in seven months - pushing the average annual household bill up by almost £200 to £1,288.

British Gas blamed rising wholesale prices for the increase, which comes weeks after ScottishPower said it was to raise its bills.

But consumer groups, concerned about the effect further rises will have on cash-strapped households, claimed wholesale prices were actually about a third lower than three years ago, while British Gas's bills were now 44 per cent higher and electricity tariffs 21 per cent higher than they were in 2008.

"Consumers simply don't trust that energy companies have customers' interests at heart and rightly question whether prices are fair," Mike O'Connor, chief executive of Consumer Focus, said. "Wholesale costs have gone up, but they are still around a third lower than their 2008 peak. Yet in this time, British Gas's prices alone have risen by around 44 per cent on gas and 21 per cent on electricity and suppliers have made healthy profits."

But the company rubbished Consumer Focus's analysis, saying it had compared just one day in 2008 with 2011.

"The reality is that retail prices from August 2011 will be a little higher than in August 2008 - around 10 per cent more," a spokeswoman said.

The company said it had begun notifying customers of the rise, which is expected to be followed by hikes from the remaining big six providers.

"British Gas recognises the difficulties customers are facing in the current economic climate, but today's announcement follows steep rises in wholesale costs, which have increased 30 per cent since last winter because of higher global demand for gas, driven by increased consumption in Asia and the impact on supply of unrest in the Middle East and North Africa," it said.

British Gas - which, alongside ScottishPower and Scottish & Southern Energy, is one of the "big six" energy suppliers currently under review by regulator Ofgem for its pricing structure - last year reported profits of more than 740 million.

Lucy McTernan, chief executive of Citizens Advice Scotland, warned families would be hard hit by the latest increase.

"This is yet more bleak news for Scottish families, many of whom are really struggling just to get by," she said. "Increases like these will affect everyone, but they have a disproportionate impact on those who are on the lowest incomes. Once again, the poorest will be hit hardest of all."

She added: "With all the companies increasing their prices, it's getting to the stage where there's no such thing as a good deal in the fuel industry."

Richard Lloyd, executive director of consumer watchdog Which?, said customers were already having to cut back and warned many householders could be facing a "cold winter".

New research out this week showed that about one in four British families is already classified as being in fuel poverty - defined as spending more than 10 per cent of household income on energy bills.