Centrica, the owner of British Gas, sits between a rock and a hard place. Every time it raises prices for its millions of domestic gas and electricity customers it risks a consumer backlash.

This January's price hike is the main driver for the loss of about 100,000 accounts. Another price rise will see thousands more head for the exit.

But unless it passes higher wholesale energy prices onto consumers its margins will take the hit.

It is perhaps not suprising that British Gas dared not spell out explicitly that price rises were just around the corner. But the stockmarket quickly cottoned on to what Centrica meant when it said it would take "the necessary action to deliver reasonable margins in the retail business."

The warning pushed Centrica shares up. Maintaining margins for the loss of a few thousand customers makes business sense when you are still the dominant energy supplier to households.

Should wholesale energy prices suddenly dip, don't expect British Gas to pass them on swiftly. A mismatch between wholesale and consumer prices last year saw second-half profits slump to £38 million from £533 million in the first.

British Gas will not want to make the same mistake again. It can't afford to, given its £1 billion a year investment programme.

But British households need to understand that British Gas and other energy suppliers are hostage to a global shortage of gas. In the space of a decade the UK has gone from being a net exporter of gas to importing 40 per cent of its requirements.

British Gas relies in part on supplies of liquified natural gas (LNG), where it competes with Japan, the world's largest importer of LNG. During the winter of 2006-07 the Isle of Grain in Kent, the key LNG terminal, handled 24 large consignments. Last winter the import tally there fell to 10.

Small wonder then that Centrica wants to take a junior partner role in EDF of France's bid for British Energy, the nuclear power generator. However unpalatable nuclear may seem for some, it might just be the saving grace for the majority of British Gas customers who simply want cheaper bills.

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