Average household energy bills in the UK could rise by almost half this year, market experts said yesterday.

If wholesale oil and gas prices continue to increase, average British energy bills could reach £1,327 by the end of 2008 – compared with £912 at the start of this year – a record increase, according to uSwitch, the price comparison website.

The prediction came as Centrica, the owner of British Gas, set off a storm of protest yesterday when it issued the strongest signal yet that consumers will be hit by a fresh round of price rises later in the year.

Centrica gave warning in a trading statement that overall profits from its British Gas residential business for the first half of 2008 would be significantly lower than 2007.

In a thinly veiled hint that further price increases were on the way, Britain’s biggest energy supplier said that it would take what it called the necessary action to deliver reasonable margins in the retail business.

British Gas, which serves 16 million customers, said that forward wholesale gas prices for next winter had risen 77 per cent to 82p a therm, compared with 44p a therm last winter.

The warning was issued as oil prices struck a fresh high yesterday of $126.40 dollars a barrel, amid tensions in the Middle East and supply fears in Nigeria.

Citigroup estimates that British Gas will need to raise prices by up to 18 per cent this year to cope with soaring wholesale prices and to restore profit margins.

Speaking at Centrica’s annual meeting, Sam Laidlaw, its chief executive, set out a gloomy outlook for British energy prices. “These are the highest [forward gas] prices we’ve ever seen in the run up to a winter period,” he said. He blamed Britain’s growing need to import gas from overseas because reserves from the North Sea were being rapidly depleted.

Last year, he said, about 27 per cent of the gas that Britain required was imported, but this is set to reach 75 per cent by 2015. He also said that the growing need to invest in low-carbon power generation, including renewables and nuclear, was pushing prices higher.

“We will need very extensive new investment in cleaner forms of generation if demanding European and UK government targets on emissions reductions and renewable energy generation are to be met,” Mr Laidlaw said.

Any further increase will come on top of Centrica’s 15 per cent increase in bills announced this year, which took the company’s average annual dual fuel bill to £1,055, up £143.

Britain’s five other big domestic energy suppliers – E.ON, npower, Scottish and Southern Energy, Scot-tishPower and EDF – all raised gas and electricity prices this year along with British Gas.

The comments set off a storm of protest from campaigners against fuel poverty – defined as those people needing to spend at least 10 per cent of their income on energy, a threshold that affects 4.5 million households in the UK, or one in five.

“Centrica’s decision to keep its profits as high as possible will mean that millions of older people will be facing even higher bills than before and having to make the unenviable choice between whether they can eat or heat,” Dot Gibson, vice-president of the National Pensioners Convention, said.

Andrew Horstead, an analyst for Utilyx, the energy consultancy, blamed a lack of competition in the British energy market for fostering an atmosphere in which suppliers pass on costs to their customers far more quickly than in other industries, such as food.

“The food sector has a much bigger supply chain, which makes it far more competitive,” Mr Horstead said. “Everyone is competing all the time on price, so suppliers tend to absorb much more of the costs and to try to drive prices lower.” He said that the UK energy market was much less competitive because it had only six large companies competing against one another.

Ms Gibson called for government intervention to stop energy companies from profiting at the expense of vulnerable pensioners.

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