It is "inevitable" that consumers will face increased prices for energy in 2006, the managing director of British Gas said today.

The news will anger British Gas customers who were dealt a 15 per cent increase to their fuel bills in September and have since seen the supplier labelled "the most expensive"in Britain. Gas prices for consumers have risen by around one-third since January.

But BG's Mark Clare said that high wholesale prices were certain to have a further knock-on effect on household bills. Britain now relies on gas storage facilities and imports from continental Europe to offset dwindling North Sea supplies.

"With wholesale prices where they are, all suppliers are going to have to put prices up in 2006, and I think that is inevitable," Mr Clare told BBC Radio 4’s Today programme.

"We are already having to pay very, very high prices for gas for January and February for our customers, and consumers will therefore look forward to higher prices in 2006.

"I don’t think we have any choice when you look at the level of wholesale prices."

Consumer groups have already warned that a trading statement earlier this month from Centrica, the owner of British Gas, had highlighted the group's intention to raise prices in the new year. According to the uSwitch.com, the price comparison website, British Gas is the most expensive gas supplier.

It said that households that have not switched gas and electricity supplier since the home energy market was deregulated in the late 1990s can save an average of £140 a year on their fuel bills by shopping for the best deals.The site expects average utility bills to rise by up to 15 per cent in the first quarter of 2006.

Mr Clare's comments came as wholesale gas prices, which give some guidance on industrial gas demand, have returned to levels around 70p a therm, compared with 170p a therm last month when supply fears hit the market.

The price drop was prompted by lower demand from industry during the holidays, traders said.

Mr Clare said British Gas was "focusing on reducing costs as fast as we can" in order to hold price rises down in the coming months.

However, he played down the prospect of supply interruptions due to colder-than-usual weather. British Gas was yesterday forced to deal with about 20,000 heating breakdowns, double the number of call-outs usually received on a winter's day.

Mr Clare said British Gas was confident it would be able to maintain supplies to consumers this winter, which is forecast to be one of the harshest in recent years.

"We can only rely on the Met Office forecasts, and what they have effectively said is that it will be a ‘one-in-10’ winter," he said.

"A one-in-10 winter is something that the UK can cope with quite well, as long as we don’t have some associated infrastructure failure."

The Met Office predicted that the winter was likely to be of a harshness that can be expected once in every 10 years.

There are further fears that a dispute between Russia and Ukraine over gas supplies and pipe networks could disrupt supplies to the EU this winter, causing a knock-on effect to Britain.

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