Ofgem warns that homeowners could see their gas bills increase by £80, taking bills to over £700 a year due to the rising cost of wholesale energy.

In its latest quarterly update of the energy market, the industry regulator warned that prices have risen on the wholesale market – where suppliers buy their energy from. The report said: “We forecast our estimate of wholesale energy costs to begin to increase over the coming months. This is because prices in forward markets have further increased since our June report. This effect is more pronounced in the market for gas. We estimate that by spring 2011 gas purchase costs may increase by 13 per cent.”

A 13 per cent increase in gas prices, if they were all passed onto the consumer, would see annual gas bills jump from £625 to £706.

Thomas Lyon, energy expert at uSwitch.com, the price comparison website, said: “At the moment suppliers are still making a healthy margin. But Ofgem’s forecast suggests that this may change by Spring 2011. This could herald a price increase for households although it’s important to stress that this is by no means a done deal.

“We would urge households to take the warning on board just in case and ensure they snap up a competitive energy deal and take steps now to control their energy usage as we go into the winter months.”

Full article: The Telegraph