British Gas triggered fury last night with inflation-busting increases in bills that will add almost £200 a year to the cost of heat and light.
The news will send a shiver through the 13million families the firm serves – roughly half the country – against a background of the biggest squeeze on living standards in generations.
Gas is going up 18 per cent and electricity by 16 per cent next month, taking the average annual dual-fuel bill to a record £1,288.
The surge in bills is being accelerated by a host of controversial ‘green’ taxes designed to drive a shift to wind, wave, solar and nuclear power.
These add around £100 a year to energy bills, according to the industry regulator Ofgem, though experts suggest the figure could be as much as £150.
High bills have thrown millions of families and pensioners into ‘fuel poverty’, which means that they face a nightmare choice each winter between heating and eating.
The latest price hikes, if all suppliers follow suit, are predicted to push up the number in this situation by some 2.8million to almost 12million.
The energy companies claim the price rises are necessary to reflect increases in the cost of gas and electricity on international wholesale markets.
However, this is rejected by the official customer body Consumer Focus. It points out that the current wholesale gas price is 29 per cent less than in the summer of 2008.
Costly business: How the price hikes have affected household bills
By contrast, the price British Gas is charging its customers is up by 44 per cent.
On electricity, the wholesale price is down by 37 per cent over the past three years, but the British Gas bill is up by 21 per cent.
The evidence will increase suspicions that British Gas, its parent company Centrica and the other major energy suppliers are profiteering.
Profits at British Gas hit an all-time high of £742million last year, while those for Centrica soared by almost a third to £2.4billion, generating big bonuses for bosses.
The chief executive of Consumer Focus, Mike O’Connor, said: ‘This price rise will send a shock wave across the country.
‘The impact on customers will be severe, piling more pressure on stretched household budgets.
‘Consumers simply don’t trust that energy companies have customers’ interests at heart and rightly question whether prices are fair.’
British Gas claimed that the Consumer Focus analysis of changes in wholesale and retail prices was ‘highly misleading’. It said the figures did not reflect increases in the costs of doing business.
Earlier this year, Ofgem accused energy firms of being greedy and lazy. It complained that customers are bamboozled by more than 300 complex tariffs.
A number of investigations are under way over the mis-selling of energy deals, particularly through doorstep salesmen.
There are also suspicions the ‘big six’ firms – British Gas, Scottish & Southern Energy (SSE), nPower, E.on, Scottish Power and EDF – are failing to compete on price and service.
Scottish Power announced in June that it was hiking its cost of gas by 19 per cent this August.
Ofgem is sending in a team of independent accountants to look at the books of the major suppliers to discover the truth about prices and profits.
The Coalition has failed to deliver on promises to order a Competition Commission investigation into prices.
Yesterday, the Energy and Climate Change Secretary, Chris Huhne, argued that the best way to avoid bill shocks is to insulate homes and switch away from fossil fuel to nuclear and green power.
‘The UK electricity market has to change, so that we escape the cycle of fossil fuel addiction. Alternatives like renewables and nuclear power must be allowed to become the dominant component of our energy mix,’ he said.
However Labour MP John Robertson, who sits on the energy and climate change select committee, described Mr Huhne’s efforts as ‘weak’.
He said: ‘There are new burglars in this country and they are the energy companies. These price hikes are deeply irresponsible and a disgrace. It should be a crime as it will be a cold, bare and hard Christmas this year for many.’
He called on ministers to reverse a £100 cut in the winter fuel allowance to pensioners due to be implemented later this year.
British Gas managing director Phil Bentley said the firm had no choice but to pass on the increase in wholesale prices since last winter.