The chief executive of one of Britain’s largest power companies issued a warning yesterday that further energy price rises were imminent.

Ian Marchant, the chief executive of Scottish & Southern Energy (SSE), which supplies power to 8.45 million UK customers, said that an unprecedented rise in oil prices in recent months meant that the outlook for consumers was not good.

He refused to rule out further SSE price increases this year. “The reality is that the whole industry is facing a significant upward pressure in its input costs. If the wholesale price environment stays as it is, we cannot defy gravity,” he said, reiterating that the cost of wholesale gas contracts is closely linked to oil prices.

Peter Atherton, a utilities analyst for Citigroup, said he that expected power companies to raise prices by “at least 15 per cent” over the coming months to restore margins. He added that summer prices for the companies would be extraordinarily high because of the high oil price, upgrades that will lead to coal station closures and outages at nuclear power stations. “If they do nothing they are loss making,” he said. “Some are predicting price rises of 25 per cent and, if [input] prices continue as they are, I could see 20 per cent.”

The comments came as npower, one of SSE’s rivals, announced a surprise cut in one of its tariffs yesterday. It reduced the price of its online dual fuel energy plan, Sign Online 11, by £16, from an average of £878 to £862.

Tim Wolfenden, the head of home services for switching service uSwitch.com, described the cut as “a bolt from the blue”.

Mr Marchant was speaking as SSE reported a 14 per cent rise in full-year pretax profits to £1.23 billion from £1.1 billion, driven by earnings in its supply and generation business. SSE was the last of Britain’s big six power companies to raise prices last month.

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