Wholesale energy rises being passed on to customers.

Household energy bills are expected to jump by a fifth over just a few months as suppliers once again pass through to users the surging cost of buying power and gas on wholesale markets, analysts say.

Gas and power bills have already swelled by a third in the last two years, and experts say fresh double-digit percentage rises are inevitable that will take the annual cost for an average family home close to 1,200 pounds.

"Domestic gas bills are going up but not fast enough for suppliers to recover increases in the cost of wholesale gas, I think we'll see those price rises start again fairly soon -- maybe even within this first quarter." analyst Niall Trimble of the Energy Contract Company said.

Wholesale gas and electricity prices hit record highs late last year, boosted by strong oil prices and worries about declining North Sea gas production.

Past price rises

Power and gas prices have slipped over the past couple of months but remain at historic highs.

The country is now a net importer of gas, and this has added to companies' costs.

Centrica, which supplies energy to more than half of all residential users under the British Gas brand, may be about to raise bills by up to 20 percent, analysts say, as it looks to plug a potential 700 million pound gap between its buying and selling prices in 2006.

Centrica slapped a 14.5 percent increase on to household bills only last September, a move which experts say gave competitors Powergen, NPower and Scottish Power the confidence to introduce similar price hikes of their own.

Follow the Leader

ING utility analyst Fraser McLaren said that despite seeing customers flee last time around, managers at British Gas will consider another increase soon.

"Tariff increases in the short term are inevitable," said McLaren in a note.

"Last year's better-than-expected experience with customer losses should give the company confidence to press ahead with rises in gas and electricity tariffs of 18 and 15 percent respectively, that we estimate are required to prevent margin erosion."

Edmund Reid at Cazenove said British Gas energy bills could go up by 15 to 20 percent and that these might be announced ahead of its full year results on February 24.

Centrica declined to comment.

British Gas competitor NPower, a unit of German utility RWE, raised gas prices by 13.7 percent from the start of the year and put electricity up by 10.5 percent, while Scottish & Southern Energy raised its gas and electricity prices by a respective 13.6 percent and 10.45 percent.

Analysts say that if British Gas raises bills first, customers can expect the others to follow.

"Ultimately, they're all in the same position," Angelos Anastasiou of Williams de Broe told Reuters.

Sources: http://uk.news.yahoo.com

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