Centrica and Scottish & Southern Energy today admitted to MPs that UK customers face a further increase to their energy bills, adding to the 15 per cent rise both companies imposed on millions of Britons earlier this year.

Sam Laidlaw, chief executive at Centrica, parent of British Gas, told the Business and Enterprise Select Committee, which is investigating UK energy prices, the rise in wholesale gas and prices will have to be passed onto customers.

Mr Laidlaw said Centrica, which services 16 million customers through British Gas, is buying gas at £1 per therm for next winter but selling it to customers at 60p per therm and said the margin is unsustainable.

Last week, The Times exclusively revealed that fuel bills could rise by 40 per cent this year due to increasing wholesale gas prices, which have nearly tripled from 36.35p per therm since last June. Wholesale gas prices are closely linked to oil which recently surged to a record $138.89.

Leading market analysts told the Times an increase of 40 per cent would drive the average UK energy bill from £1,048 to £1,467 within seven months.

Ian Marchant, chief executive at Scottish & Southern, which provides fuel to nine million customers, said that owing to high wholesale prices “at present supply is loss making”.

Mr Laidlaw 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.”

The committee is investigating the UK energy markets for the Department of Business, Enterprise and Regulatory Reform (BERR), after all six of the UK's major energy suppliers raised their prices earlier this year.

The inquiry is running alongside a parallel investigation by Ofgem, the energy regulator, into the energy markets which is expected to report in September.

The price rises, put in place earlier this year, sparked concerns that the small amount of energy suppliers is harming competition in the market.

Mr Laidlaw said: “UK energy markets are highly competitive, as demonstrated by more than five million customers changing supplier last year, UK household energy prices generally being among the lowest in Europe and £10 billion currently being invested in new gas and power assets by around 24 different companies.”

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