Families face shock 20% rise in heating bills as gas giants cash in on Big Freeze

Gas bills will rise by 20% as families battle to keep warm during the cold winter

Families face record winter gas bills averaging £360 as power companies reap a huge windfall from the big freeze.

The 'big six' energy suppliers have refused to pass on a steep fall in wholesale prices to customers.

They are collecting a profit bonanza of £846million in a single month by charging over the odds to keep homes warm.

Householders have had no choice but to turn up the heat to cope with the coldest spell in 30 years, with snow and ice blanketing the entire country.

Domestic demand for gas over the last month is predicted to be 60 per cent higher than in a normal winter.

This increased consumption will result in average bills of £360 for the three-month period from November through to the end of January, compared with £300 a year ago.

Greedy suppliers decided to reduce the tariff to customers by less than 10 per cent - even though the wholesale price of gas came down by some 60 per cent between 2008 and 2009.

Separately, heating oil companies, which provide fuel to thousands of rural communities, have been accused of putting up their prices by more than 50 per cent since November.

The evidence of apparent profiteering has brought calls from consumer groups and MPs for inquiries by both the Competition Commission and the Office of Fair Trading.

At the same time, there is a mounting clamour for a windfall tax from pensioner groups, Labour MPs, unions, think tanks and the Local Government Association, which represents councils from all parties.

Analysts at the TheEnergyShop.com suggest the bill in the coldest period over Christmas and New Year would have been at least £36 lower if suppliers had cut their prices by a further 10 per cent, as they easily could, before the winter began.



Multiplying this across the nation's 23.5million households suggests the big six - British Gas, Scottish & Southern Energy (SSE), RWE nPower, Eon, EDF and Scottish Power - are making an extra £846million in a month.

British Gas is on course for a rise of more than 50 per cent in annual profits

SSE recently revealed a 36 per cent increase in profits for the period before the temperatures plummeted. UK suppliers owned by German, French and Spanish firms are enjoying a similar bonanza.



The snow continues to cause disruption, as evidenced by this snow plough clearing thawing snow on the A66 in County Durham

Andrew Hallett, energy expert at the official customer body, Consumer Focus, said: 'As energy firms failed to fully pass on wholesale price cuts before winter they will be cashing in on the cold snap.

'Consumers are paying over the odds for their increased heating needs, giving a profits boost to suppliers.'

Joe Malinowski, founder of TheEnergyShop.com, said: 'This year's record winter bills will come as a real shock to many people particularly when you consider that wholesale gas prices fell by over 30 per cent in 2009 and are 60 per cent lower than their 2008 peak.

'In freezing conditions, turning down the heating is not always an option.'

Apart from the cost, there is a real threat to the health of elderly customers who are too scared to turn on their heating. It is feared the cold temperatures, which exacerbate many underlying health problems, could contribute to some 60,000 deaths.

The National Pensioners' Convention said: 'We know that energy firms are quick to put up prices yet very slow to bring in the reductions.

'Energy companies, particularly in this cold winter, will be making huge profits out of very vulnerable customers. That raises the serious question as to whether they should pay money back through a windfall tax to fund things like home insulation.'

The Local Government Association has argued the need to raise an extra £500million a year for ten years from both oil and gas firms to fund a massive home insulation scheme.

Christine McGourty, director of Energy UK, which represents the major gas and electricity suppliers, rejected allegations of profiteering and advised anyone struggling with bills to contact the supplier for help.

She said much of the gas being used this winter was bought up to two years ago, when wholesale prices were higher.