Fuel bills set for further hikes
Energy companies have revealed that further increases in gas and electricity bills are inevitable, but did not put a figure on how much more households would have to pay.
The bosses of Britain's six biggest energy firms were called to answer questions from MPs on the business and enterprise select committee, and claimed they were struggling to contend with the soaring cost of wholesale prices.
There are fears that annual prices could rocket by 40% (approximately £400 for the average family) later in 2008 - following on from the 15% rise already seen this year.
Sam Laidlaw, chief executive of Centrica, the parent of British Gas, told MPs that his company were currently operating with unsustainable prices, by selling gas at 40p less per therm than it was buying. He warned: "It is clear that at some point...gas prices are going to have to go up."
Research from within the industry has suggested that wholesale gas prices have grown by 70% this year. Costs have risen due to falling production in Britain, resulting in Centrica having to look elsewhere, Laidlaw added.
Easing fuel poverty
A 40% rise in average fuel bills would only exacerbate the financial worries of households who are already struggling with rising food, fuel and housing costs.
Charities have urged companies to aid elderly people who are likely to be at risk of falling into fuel poverty this winter.
Members of the six leading energy firms agreed in the discussion to set aside £50 million this year to rid those households most liable to suffer from fuel poverty. These are defined as households which spend over 10% of their income on energy - of which there are an estimated 2.5 million in Britain.
Further help may come after watchdog Ofgem revealed plans last month to share data on low-income households with energy companies to help people pay their fuel bills. These plans, however, are still to be approved by Parliament.
Following the talks, charities Help the Aged and Age Concern called on suppliers to provide a £50 rebate this winter to people aged 70 and over.