Scottish & Southern Energy tells of cost pressure

Electricity and gas bills look set for double-digit rises in the next few weeks as Britain's second-biggest energy supplier said that it was under unbearable pressure to pass on rising costs.

Wholesale gas prices have risen by 60 per cent this year and Scottish & Southern Energy (SSE) yesterday told investors that the soaring gas price would lead to substantially lower first-half profits than in previous years.

Ian Marchant, SSE chief executive, said it was becoming increasingly hard to keep retail energy prices down, as wholesale prices soar. He said: “The extent of the energy shock with which the entire global economy is having to contend has been well documented, and its full impact on prices for electricity and gas in the UK has still to be felt. We are continuing to resist the pressure to put up prices for domestic customers, but doing so is becoming more difficult by the day.”

British Gas, the UK's biggest energy supplier, with 16 million customer accounts, is expected to move first to raise prices, possibly as early as next week when interim results of its parent, Centrica, are issued. Centrica last week published a report saying that with oil at about $140 a barrel, the price of gas for an average household could hit £1,000 a year over the next two years.

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