British Gas owner Centrica today revealed profits are set to be higher than expected, just days after the firm announced an energy price hike for eight million households.

The group predicts operating profits for 2010 will be slightly ahead of analysts' expectations of £2.2 billion in a trading update (see the Cheap Gas & Electricity guide).

British Gas said last week it would raise gas and electricity prices by an average 7% on 10 December, blaming an increase in the price it pays for gas, and rising government, environmental and transport costs (see the BG to hike prices MSE News story).

It became the second utility giant to announce prices hikes in recent weeks after Scottish & Southern Energy said late last month it will put up gas bills by 9.4% from 1 December.

The news of increased profits was described as "yet another kick in the teeth for customers of the energy giant" by Scott Byrom, energy manager at comparison site

Audrey Gallacher, from lobby group Consumer Focus, adds: "Customers will be baffled as to why they are being told to pay more when British Gas is on track for such huge profits.

"British Gas has admitted in the past that high margins [profits] due to low wholesale costs have given a major boost to their balance sheet.

"This begs the question, yet again, of why customers have seen only tiny price cuts when wholesale costs have been so low for so long, yet suppliers hike prices as soon as wholesale costs start to edge up.

"Unless there is a major injection of transparency into this increasingly complex sector, it will remain impossible to tell whether bills are fair and the market is working properly."

Slash costs

Those languishing on their provider's standard deal have been urged to switch tariff to cut costs as the difference between a typical standard and online energy bill can be £300 a year.

To find the best tariff, compare the options available via a comparison site (see the Cheap Gas & Electricity guide and Should I fix? MSE News story).

The cheapest deals are available to those who get bills by email and pay by direct debit.

When switching, remember that when a firm describes its tariff as cheapest outside of a comparison site, it is only best value as a nationwide average.

The energy market is complicated so determining which is the cheapest provider for you depends on where you live and how much power you use.

This is why a comparison, based on your circumstances, is key.

Additional reporting by the Press Association.

Further reading/Key links

Slash energy costs: Cheap Gas & Electricity
Your rights: Fight Energy Direct Debits
Boiler protection: Boiler Cover