British Gas has delivered a blow to millions of households by confirming it will hike gas and electricity tariffs by 6% from next month.
Centrica-owned British Gas said the annual dual fuel bill for British Gas customers with average consumption will increase by around £80 to £1,318.
A total of 8.5 million households will be hit by the move, although another one million British Gas customers on fixed price contracts will be unaffected.
British Gas managing director Phil Bentley said rising costs that are largely outside its control but which make up most tariffs were to blame. However, the pre-winter increase comes just months after it announced a 23% leap in half-year profits at its residential arm to £345 million.
Rival SSE, which trades as Southern Electric, Swalec and Scottish Hydro, is due to increase tariffs by 9% on average on Monday, hitting about five million electricity customers and 3.4 million gas customers. Attention will now switch to the other big suppliers - EDF, Scottish Power and npower - while E.ON has guaranteed a price freeze for 2012.
British Gas put gas and electricity tariffs up by 18% and 16% respectively in August 2011, blaming higher wholesale costs, but this was followed by a drop of 5% in electricity tariffs in January when prices eased.
Mr Bentley said: "Britain's North Sea gas supplies are running out, and British Gas has to pay the going rate for gas in a competitive global marketplace. Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers' homes, and the costs of the Government's policies for a clean, energy efficient Britain, are all going up."
Ann Robinson, director of consumer policy at uSwitch, said the increase would leave many households facing a winter where they are "scared to turn on heating for fear of the cost".
Centrica said prices in the wholesale market for gas this winter are around 13% higher than those paid for the same period last year. Assuming normal weather conditions and despite Friday's price rise, Centrica said British Gas Residential profits for the second half of 2012 are expected to be around 15% lower than for the same period of 2011. Centrica estimates its residential margins after tax in 2012 will be 5p in the pound - a similar level to last year and lower than the prior year.
Mr Bentley said: "Unfortunately, we cannot run our business sustainably on lower margins and still make the investments in jobs and future energy sources that Britain needs, especially if the country is to grow its way out of recession."