Mark Adams, Monday May 12, 2008

The price of household gas is set to rise yet again after British Gas today warned that bills will have to climb to keep pace with sharp rises in wholesale costs. Fuel experts warn that the average gas bill could rise by as much as £400 over the course of the year - a record increase. Here's how to beat the coming price hikes

Household gas bills are set to rise sharply after British Gas's parent company Centrica today warned that it will have to pass on increases in the cost of wholesale gas and electricity to consumers to help protect its profits.

Centrica said in a management statement that it would take "the necessary action to deliver reasonable margins" to its shareholders - likely to take the form of significantly higher charges for gas and electricity.

Production costs for energy suppliers have increased dramatically - the Centrica statement shows that wholesale gas prices have increased by 92% over the past twelve months and wholesale electricity costs have more than doubled. Experts predict that consumers will be forced to shoulder their share of these increased costs.

"If the parent company of Britain's biggest energy supplier is feeling such acute pressure over pricing then it's safe to say that others are feeling it too," says energy expert Tim Wolfenden of price comparison website uSwitch.com. "It's pretty clear that something has to give and that household energy prices are going to be shooting up again this year".

USwitch claims that households could see their annual energy bill rise by as much as 46% over the course of the year - an increase of more than £400. Suppliers have already imposed double-digit price hikes of 15% since January - and uSwitch predicts that a second and third round of increases is likely before the year is out.

Find a cheaper energy supplier

Time to act
You don't have to sit helplessly and see your household bills spiral out of control - there are steps you can take now to bring your energy costs down.

There are two simple ways to save money on your gas and electricity bills. The first is to see if you can save by switching to a cheaper energy supplier - the second is to see if you can move to a cheaper energy package. You could save as much as £300 by moving from a traditional tariff to a dual-fuel deal and paying by direct debit.

It's easy to find a cheaper supplier - use a price comparison website to track down a better deal. Before you start, make sure you have recent bills to hand so that you can input your gas and electricity usage data or bills into the calculator. The great thing about switching energy supplier is that nothing physical needs to happen in the home - you just get a different supplier name on the bill.

Six out of 10 households have never changed their energy provider and are still on the standard tariff paying quarterly by cash or cheque. By switching to an online tariff and opting to pay monthly by direct debit, the average household could save up to £260 a year.

The provider which works out to be the cheapest will depend on your consumption and whereabouts in the country you live. None of the leading providers issue annual contracts so you can easily move again should your rate rise sharply.