One of the UK’s biggest energy suppliers this morning predicted sharp rises in household energy bills, after it said it could not commit to maintaining prices for the rest of the year.

Ian Marchant, the chief executive of Scottish & Southern Energy (SSE), said higher gas, oil and coal costs were hitting the industry’s margins and that eventually prices would have to go up.

“We can absorb (higher costs) for so long and eventually someone’s position changes,” he said. “If prices go up we want to be the last to do it but the reality is the whole industry is facing significant pressure on input costs.”

He said the company had no plans today to increase prices but that if wholesale prices stayed at current levels SSE could not “defy gravity.”

City analysts believe that electricity retailers will need to raise prices by at least 15 per cent by September as margins come under increasing pressure from higher wholesale gas and coal costs.

“This is the biggest rise in underlying input costs the industry has ever seen in a four month period,” he said. “It doesn’t matter which commodity you look at, every one has gone up 10 per cent every months for the last 4 or 5 month in a row.”

Mr Marchant added that it was difficult to see where rising costs for fossil fuels used to generate energy would end but that he could not see the price of a barrel of oil falling back to where it was at the start of the winter.

His comments came as the company reported a 13.9 per cent increase in annual underlying pre-tax profits, driven by 700,000 new customers that the company managed to attract from its rivals by being the last of the big six suppliers to raise prices.

For the 12 months to March 31 underlying pre-tax profit tax, adjusted for new accounting standards, was £1.2 billion, up from £1.1 billion last year.

Mr Marchant said the company was not involved in negotiations over a bid to buy British Energy, the nuclear generator. SSE has talked to British Energy in the past and has said it is interested in becoming involved in building new nuclear power stations.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts