British Gas has announced that domestic tariffs will rise for customers, meaning an average increase in the cost of gas of 18 per cent, and for electricity 16 per cent.
The change will affect nine million households with the average dual fuel customer paying an extra £190 a year.
The company has blamed the current economic climate for the price increase, which has meant that the wholesale cost of gas has gone up by 30 per cent since last winter. Britain now imports almost 50 per cent of the gas it needs from other countries around the world, and British Gas has to pay the market rate in the global wholesale energy market.
British Gas managing director Phil Bentley said: 'We are buying in a global energy market and have to pay the market rate. Rising wholesale costs is an issue facing all energy suppliers.'
Responding to the announcement, Energy and Climate Change Secretary Chris Huhne said: 'This announcement will be tough for consumers who are already struggling to meet their bills. The uncomfortable truth is Britain’s consumers are being buffeted by the violent and unpredictable winds of global fossil fuel prices. I refuse to stand by and watch this happen.
'I’m pushing the big six suppliers to help their customers overhaul their draughty homes and understand the best tariffs on offer, and I’m backing new entrants to bring more competition to the market.'
He continued: 'But there’s a way out of this. Look at how the French benefit from only relying on fossil fuels for a fraction of their power - bills there are only expected to rise by 3 per cent this year.
'The UK electricity market has to change, so that we escape the cycle of fossil fuel addiction. Alternatives like renewables and nuclear power must be allowed to become the dominant component of our energy mix. Only radical reform now will give us the best chance in the long run of keeping the lights on at a price that doesn’t wreck our economy over and over again.'