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Energy bills set to rise further, suppliers warn

24/06/2008

Energy prices are set to increase sharply this year, energy suppliers have told MPs.

A parliamentary business and enterprise select committee heard prices of gas and electricity may rise as high as 40 per cent this winter.

"We are seeing a seismic shift in commodity prices," said Dr Paul Golby, chief executive of E.ON.

"It's not difficult to see that the pressure is upwards," he added.

The six heads of the UK's leading energy suppliers insisted the price rises are due to high wholesale costs, not from profiteering.

Most householders have seen their bills rise by around 15 per cent already this year.

Sam Laidlaw, chief executive of Centrica, which operates British Gas, said: "The issue we face in the UK is that, as our gas production falls, we are no longer isolated from international markets and have to buy increasingly large volumes of gas from different parts of the world.

"Global gas prices are being driven ever higher by record oil prices and by rising demand from regions such as Asia."

Oil prices have been soaring in recent months, hitting a record of almost $140 a barrel earlier this month.

The energy bosses also warned that Britain's gas reserves are running out and an increase in imports would compound the problem.

Scott Byrom, utilities manager at price comparison website, moneysupermarket.com, said: "Today's meeting between energy providers and MPs has fuelled further speculation that energy bills could rise by 40 per cent before the end of the year.

"These price hikes will hit those languishing on standard tariffs harder than anyone else and could mean their bills will exceed £1,400 a year. However, these customers have the option to protect themselves against any increases by 'fixing' their bills now."