Electricity and gas bills look set for double-digit rises in the next few weeks as Britain's second-biggest energy supplier said that it was under unbearable pressure to pass on rising costs.

Wholesale gas prices have risen by 60 per cent this year and Scottish & Southern Energy (SSE) yesterday told investors that the soaring gas price would lead to substantially lower first-half profits than in previous years.

Ian Marchant, SSE chief executive, said it was becoming increasingly hard to keep retail energy prices down, as wholesale prices soar. He said: “The extent of the energy shock with which the entire global economy is having to contend has been well documented, and its full impact on prices for electricity and gas in the UK has still to be felt. We are continuing to resist the pressure to put up prices for domestic customers, but doing so is becoming more difficult by the day.”

British Gas, the UK's biggest energy supplier, with 16 million customer accounts, is expected to move first to raise prices, possibly as early as next week when interim results of its parent, Centrica, are issued. Centrica last week published a report saying that with oil at about $140 a barrel, the price of gas for an average household could hit £1,000 a year over the next two years.

Analysts expect Centrica to announce a sharp fall in profits for the first half next week. Overall the group will still report a profit but British Gas will not match last year's £533 million figure and Centrica is expected to emphasise that the business will stay loss-making unless it can raise prices.

Adam Scorer, of Energywatch, the consumer watchdog, said: “We expect to see major price rises from all energy companies before the year is out and probably before the autumn.

“The companies have been out softening people up, saying that they cannot cope with [wholesale] prices at these levels, which usually happens before they raise bills.”

Average gas bills have more than doubled from £310 in 2003 to £646 now, while electricity bills up from £244 to £412, taking the average dual fuel bill to more than £1,000 a year. Some industry experts say that average household energy bills will reach £1,400 by the end of the year.

In past years, SSE has made most of its pre-tax profits in the first six months. However, this year the second half is expected to be stronger.

SSE said in its interim management statement: “So far, 2008-09 has been characterised by extremely volatile wholesale markets for electricity and gas, and this may continue. Despite this, SSE still expects to deliver a modest increase in adjusted profit before tax in the year to March 31 2009.”

SSE shares fell 55p to £13.90 on profit-taking after a rally in the past week.

SSE, which has a number of coal-fired power stations, has been under greater pressure because of the huge rise in the cost of coal. The German-owned E.ON and nPower are thought to be in a similar position.

SSE said it remained committed to at least 4 per cent real growth in dividend. The growth would be possible because of a step-up in investment, including opportunities arising from its acquisition of Airtricity, the Irish wind farm business, it said.

BG Group, the oil and gas group bidding for Origin Energy in Australia, reported a 67 per cent leap in operating profits in the year's first half, after rises in prices for gas and oil and increased production, particularly of liquefied natural gas (LNG). Total first-half operating profits were £1.3 billion, up from £793 million a year ago.

Half-year operating profits for BG's exploration and production arm rose by £727 million to £1.9 billion, reflecting the high price of oil since the start of the year, although this was partly offset by a higher exploration charge.

Production volumes have risen in the Buzzard field in the North Sea and the Tapti field in India.

Operating profits of BG's LNG business, which ships gas around the world, rose by £553 million to £762 million.

BE talks advance

British Energy's long-running takeover talks are at an advanced stage, the company said yesterday, sending its shares up more than 6per cent to 729p, valuing the company at £11.7billion.

The Times reported yesterday that EDF was closer to winning control of the nuclear operator after it emerged that Centrica had resumed talks with EDF to buy a stake of up to 25 per cent in British Energy if the deal proceeds.

The company said: “The board confirms it is in advanced discussions with one party. However, there can be no certainty that the discussions will lead to an offer.” A deal could be struck shortly before or just after EDF's first-half results on August 1.

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