Scottish and Southern Energy (SSE), whose customers were hit with bill hikes of 9% last month, says its half-year profits have jumped 38% to nearly 400 million.

Shareholders in SSE, which trades as Southern Electric, Swalec and Scottish Hydro and is the UK's second-largest generator of electricity, will also be paid a dividend of 25.2p a share.

SSE's rise in profits comes after it hiked gas and electricity prices for five million electricity customers and 3.4 million gas customers.

Fellow big six provider British Gas is upping prices by an average of 6% on Friday.

SSE insists its household energy supply business accounts for just 8% of its total operating profits, and that conditions in the rest of the energy market remain challenging.

Chairman Lord Smith of Kelvin says: "I believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs, while providing an income return that shareholders like pension funds need."

Caroline Flint, Labour's energy spokeswoman, says: "People will not understand how the energy giants can get away with inflation-busting price rises this winter when their profits are already increasing."

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