British Gas' standard tariff customers who pay quarterly have seen their annual gas bills soar by 56% this year from an average of £568 to £885, factor in electricity and they are now paying £1,328.19.
The country's largest energy provider defended its decision saying that rising wholesale costs left it with no choice but to increase gas prices by 35% - it said the cost of winter 08/09 gas is 89% higher than that of winter 07/08. British Gas has also guaranteed that it will not increase its standard prices again this year and that its most vulnerable customers on its Essentials tariff will not see their bills increase until next April.
However, this is likely to do little to appease the majority who are angry that British Gas chose to pass on such a large price increase the day before its owner, Centrica, announced profits of £992m for the first half of 2008.
The four other main energy providers Eon, Npower, Scottish Power and Scottish & Southern Energy are also expected to announce price hikes in the coming weeks.
What do these latest price hikes mean for you? Vote now in our weekly poll.
Despite the price hikes, there are still savings to be made. Millions of households are still on their provider's standard tariff and are paying for their gas and electricity quarterly by cash or cheque. If you are one of them, use our comparison tool and input your postcode and usage details to find out how you could save money.
So what action should consumers take? The obvious option is to switch to a fixed or capped rate tariff. However, demand for such products has soared in recent weeks and there are only two fixed tariffs to choose from, both of which were launched in the last seven days and already factor in recent price hikes.
EDF launched a new product, Price Protection 2009, which is fixed until 31 October 2009, the average annual cost of which is £1,229.42 while British Gas has launched a deal that is fixed until September 2011. The average cost of this is higher at £1,288.19 but you are obviously protected against price increases for a longer period of time. But herein lies the problem.
The cheapest option for consumers remains a variable rate product - if you go for an online tariff and pay by monthly direct debit, you could be paying less than £900 a year for gas and electricity, but for how long?
Online tariffs British Gas' Click Energy 5 costs the average household £845.10 a year, although its prices have yet to rise. When British Gas increased prices of its standard tariff in January, it left the cost of its online deal, Click Energy 4, unchanged until the end of February.
Anyone signing up for an online tariff now therefore needs to accept the fact that the cost will probably rise before the end of the year. However, prices would have to rise by 52% before the cost of Click Energy 5 equalled that of British Gas' Fixed Price 2011.
Such an increase within the next three years is quite possible given what's happened so far this year, but are we likely to see similar increases again, or could we be near the peak of the current cycle?
You can find analysts who could argue each eventuality so you therefore need to base your decision on what you feel comfortable with. If rising food, fuel and energy prices are a worry and you would prefer the security of fixing your gas and electricity prices for the next three years, a 52% premium may be well worth paying.
However, if you want to keep your bills as low as possible for the time being and are happy to take a gamble and accept that they will probably rise, at least in the short term, you may prefer to opt for the online option.
There is no right or wrong answer, you just have to go with what you are most comfortable with. That said, it is worth remembering that switching energy provider is really straightforward so whatever you decide to do now, it is worth checking regularly to see if there are any better options available to you.
The most accurate way of finding the cheapest fixed product for you is to use a gas and electricity comparison tool to compare rates based on your consumption levels and your postcode.
The only thing to watch out for is cancellation fees which apply to some fixed rate products. For example, you will be charged a £70 fee for gas and £30 for electricity if you cancel your contract on the British Gas Fixed Price 2011 during the fixed period.
How else can you save cash? Regardless of which tariff you choose, it's also worth looking for ways to reduce your energy consumption and minimise your bills as well as help the environment. Here are our top ten tips:
Adjust your thermostat - According to the Energy Saving Trust, reducing your room temperature by just 1°C could save you around 10% on your heating bills. Also adjust the cylinder thermostat on your water to 60°C.
Remember to turn lights off when you leave the room.
Close curtains to stop heat escaping.
Only boil as much water as you need, but remember to cover the element in the kettle.
Use energy saving lightbulbs - they last around ten times longer than ordinary bulbs and can save you £40 over the lifetime of a bulb.
Don't leave appliances on standby and don't leave electrical items to charge unnecessarily.
Consider investing in a lagging jacket for hot water pipes and insulate pipes - this could pay for itself within a few months.
Defrost freezers regularly and don't leave the fridge door open longer than necessary to ensure it runs efficiently.
Consider investing in loft insulation as 25% of heat lost in a home disappears through lofts without it. Fix leaking taps - a dripping hot water tap could waste enough energy in a week to fill half a bath so make sure it's turned off.
Have your say: What do you think about British Gas' and EDF's price rises? Could energy firms be doing more to help or are their latest price hikes fair? And how are you coping with rising bills? Visit our forum and let us know.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
Rate This Article
Click on a star to rate this article.