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The energy giant cashes in on soaring power bills with a £350m profit as one in five households faces fuel poverty

BRITISH GAS will stoke the outrage over energy prices this week when it unveils a 25% profit jump thanks to soaring household bills.

Average annual bills have doubled in the past five years to £1,345 because of rising wholesale gas prices and subsidies for low-carbon technologies. One in five households is now in fuel poverty — when more than 10% of disposable income goes to pay for electricity and heating.

The country’s biggest supplier of electricity and gas is expected to report on Thursday that it made a profit of £350m in the first six months of the year — up from £280m in the same period last year, which had unseasonably warm spells.

The jump in the number of fuel-poor homes prompted David Cameron to call a crisis meeting with the heads of the big six energy companies earlier this year. Ofgem, the regulator, has accused the utilities of using complex bills and tariff systems to “bamboozle” customers. Ed Miliband, the Labour leader, called for the firms to be broken up.

The rising cost of energy has also laid bare a bitter dispute in Whitehall in recent months.

The government has proposed an energy bill that includes a raft of low-carbon subsidies and pollution penalties to lead a £200 billion overhaul of the industry. The chancellor wants to slash some of those subsidies, mainly for onshore wind, and increase incentives for new gas-fired stations. The Department of Energy and Climate Change is pushing instead for a significant rise in green investment.

The conflict delayed the release last week of a new set of green subsidies but the interdepartmental rift has stayed behind closed doors. It will burst into the open this week.

Tim Yeo, head of the Commons energy and climate change committee, will tomorrow publish a review of the bill. In it he will accuse the Treasury of making the policy “unworkable”, warning that the changes sought by the chancellor could mean “unnecessary costs on consumers, lead to less competition and deter badly needed investment”.

The Sunday Times, 22 July 2012