British Gas is the latest energy company to announce price increases.

British Gas has followed the lead of energy companies npower and EDF and has increased both its domestic electricity and gas prices by 15%.

The company has cited cost pressures within the wholesale gas and electricity markets as the reason for the price increase.

Phil Bentley, Managing Director of British Gas, said: “As the UK’s biggest buyer of gas, we want lower gas prices. However, lower availability of supplies from both the UK and the Continent coupled with higher global oil prices have forced up wholesale prices. We can’t absorb the burden of these higher energy prices and the costs of delivering a cleaner environment.

"As Britain’s greenest electricity supplier, we are investing in further lowering our carbon emissions. However, this also comes at an increasing cost for all. Ultimately, the best way of reducing energy bills is to make our homes more energy efficient.

“Our energy market is now part of a much bigger picture. The UK gas market is competitive but is now fully linked to Continental Europe where the gas market is less competitive and prices are linked to oil prices. As oil prices have increased, so has the cost of gas across Europe, and this has hit the UK.”

The recent price increases by energy companies has been condemned by some industry professionals. Mark Todd, Head of energy and the independent comparison site Energyhelpline.com, commented: “Wholesale prices are still 20% lower than at their peak last year – so you have to ask, why do prices need to go back to record levels? It doesn’t seem justified from a company [British Gas] that’s expected to announce bumper profits for 2007 shortly.”

Energy regulator Ofgem recently [Tuesday 15 January] met with the UK Chancellor, Alistair Darling, to discuss the increasing energy prices. Alistair Buchanan, Ofgem’s Chief Executive, said: “Ofgem wants to reassure customers that we constantly monitor the competitive market and regularly publish our analysis. Obviously, we look even more closely during periods when prices are rising, but we have no evidence of any anti-competitive behaviour. We see companies gaining and losing significant market share, record switching levels and innovative deals.”

Further price increases from other major energy providers are expected in the next few days. Mark Todd added: “Scottish and Southern Energy has already said it will be the last to put up prices, as it’s done in the past, so I would predict that the next to go will be ScottishPower, sometime between 18-31 January. E.ON will be determined to hold its prices until it becomes competitive, so will probably wait until February.

“No one wants to be the bad guy, but as that role has been taken by npower, suppliers are no longer fighting with fire if they want to make more profit on energy tariffs.”

British Gas has reassured its more vulnerable customers with delayed price increases and free insulation to anyone over the age of 70.