British Gas has blamed green taxes after for increasing its electricity bills by 12.5 per cent at the same time as wholesale costs are falling.
The rise means 3.1million households on standard variable tariffs will pay an average of £76 extra.
The company is blaming green levies, Government policies and a plan to spend billions installing smart meters in every home for the rise.
Consumers are now being advised to switch away from the firm, amid claims it is possible to save up to £286 by moving to the cheapest deal on the market.
The country’s biggest energy supplier is to put up electricity tariffs next month. Its gas prices remain frozen.
Households that get their electricity and gas on a dual fuel standard variable tariff (SVT) will see their bill rise by an average of £76 to £1,120.
The firm is the last of the Big Six providers to increase prices after it promised in December to freeze tariffs until August, after rivals moved to raise their bills at the start of the year.
The country’s biggest energy supplier British Gas is to put up electricity tariffs next month
Confirmation of the decision comes after a blunder on Monday saw the group mistakenly publish an incomplete statement about increasing tariffs on its website.
Before the general election Theresa May promised to cap rip-off energy bills.
She pledged there would be an end to the ‘injustice’ of fat cat firms ripping off poor customers.
Specifically, she said there would be a cap on expensive standard variable tariffs (SVTs) – so delivering a saving of up to £100 a year for 17million households.
Writing in The Sun, she said: ‘It is clear to me that the energy market is not working for ordinary working families. Too many people simply aren’t getting a fair deal.
‘If I am re-elected on June 8, I will take action to end this injustice by introducing a cap on unfair energy price rises.’ However, the policy was opposed by senior members of her Cabinet, rumoured to include Chancellor Philip Hammond. Since the election, the idea appears to have been watered down. Instead, Ofgem has been asked to come up with a more limited system of protection for ‘vulnerable’ customers.
The decision by British Gas to raise electricity prices by 12.5 per cent has breathed new life into demands for a general cap, with the Department for Business, Energy and Industrial Strategy saying it was ‘ruling nothing out’.
Last night a Downing Street source insisted legislation to combat the energy markets was ‘in no way off the table’.
It came as parent company Centrica announced its operating profits for the last six months stood at £816million, down 4 per cent.
Theresa May put energy bills at the centre of her election manifesto, promising a cap that would cut bills for millions on expensive SVT deals by around £100 a year.
But British Gas insisted Government policies are the reason that bills are going up.
It said the wholesale cost of power has actually fallen by an average of £36 per customer since 2014.
However, it claimed this was more than wiped out by an increase of £88 to £98 per customer in various Government levies, including those to support wind farms.
It added that the price rise, which comes into effect in September, was its first since November 2013.
Centrica boss Iain Conn said: ‘We have seen our wholesale costs fall by about £36 on the typical bill since the beginning of 2014 and that is not the driver.
‘It is transmission and distribution of electricity to the home and Government policy costs that are driving our price increase. We are selling electricity at a loss and that is not sustainable.’
Smart meters are also contributing to rising bills. The devices must be installed in every home over the next three to five years at a cost of £11billion – to be added to all bills.
The Government denied responsibility for the rise, saying policy costs make up a relatively small proportion of bills.
Ministers have asked energy watchdog Ofgem to draft plans to protect vulnerable customers.
The Department for Business, Energy and Industrial Strategy said: ‘We’re concerned this price rise will hit many people already on poor-value tariffs.
Centrica boss Iain Conn said yesterday that the company has been ‘selling electricity at a loss’
‘Ofgem has committed to taking prompt action, in consultation with consumer experts, to develop proposals including a safeguard tariff. We want to see rapid progress on this commitment and are ruling nothing out.’
Ofgem insisted rises of the scale announced by British Gas are not justified by increases in industry costs.
It said: ‘It is for British Gas to justify its prices to their customers. Most standard variable tariffs continue to provide poor value, and customers on these tariffs should shop around.’
It emerged yesterday that British Gas lost 377,000 UK customer accounts in the first half of this year, and consumer groups are encouraging others to follow suit.
Prime Minister Theresa May (pictured) put energy bills at the centre of her election manifesto, promising a cap that would cut bills for millions on expensive SVT deals by around £100 a year
Alex Neill of Which? said: ‘Customers concerned about their tariff should switch to a fixed price deal now and the Government should rapidly set out how it intends to make this market work better for consumers.’
Claire Osborne, of uSwitch, said: ‘This is a body blow for consumers.
‘It’s time to switch supplier and send a message that price rises like these just aren’t acceptable.’
British Gas is giving more than 200,000 customers on the Warm Home Discount £76 credit to offset the increase.
Centrica yesterday said underlying operating profits from its UK home energy supply arm fell 26 per cent to £381million up to June.