8 July 2011 BBC News 

British Gas, owned by Centrica, is putting up its domestic gas and electricity prices from 18 August.

The change will affect nine million households with the average dual fuel customer paying an extra £190 a year.    Gas bills will rise by an average of 18% and electricity bills by an average of 16%. The change will affect nine million households with the average dual fuel customer paying an extra £190 a year.

The company blamed the rising wholesale cost of gas, which has gone up by 30% since last winter.

British Gas managing director Phil Bentley said its bills were being driven higher by the fact that the company buys 50% of its gas on the international wholesale market.

"We are buying in a global energy market and have to pay the market rate," he said.

"Rising wholesale costs is an issue facing all energy suppliers," he added.

The company said it had been selling energy at a loss for the past three or four months.

"After we put these prices up we will be making a fair return," Ian Peters, a British Gas director told BBC News.

"We are investing in the future energy supply of the UK... and energy efficiency in our customers' homes," he added.

'Healthy profits'

Centrica had already warned that it was likely to raise prices this year.  In May, the company said its customers were not paying enough to reflect the increased cost of gas on the wholesale markets, and that this would depress its profits for the first half of the year. But this argument was rejected by Mike O'Connor, the chief executive of Consumer Focus. "Wholesale costs have gone up but they are still around a third lower than their 2008 peak," he said. "Yet in this time British Gas' prices alone have risen by around 44% on gas and 21% on electricity and suppliers have made healthy profits."

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