British Gas profits have risen substantially

The news came as Centrica, British Gas' parent company, reported a 40% rise in operating profits to £1.95bn.

Trade union Unison said the profit was "obscene", coming so soon after British Gas raised the amount it charges for gas and electricity by 15%.

The announcement followed increases from rivals Npower and EDF Energy, who blamed rising wholesale costs.

Rising prices

Centrica said pre-tax profits from continuing operations were £2.1bn.

We need to earn a return to invest in new sources of energy for the UK Sam Laidlaw Centrica chief executive Q&A: Why energy prices are rising

Chairman Roger Carr said: "Centrica delivered very strong financial results during another challenging year for UK energy retailers."

The company said it had worked "diligently" to minimise the impact of a 56% rise in wholesale gas prices in the latter part of 2007.

Centrica said two-thirds of the group's earnings were made in the first half of 2007, when wholesale gas prices were falling.

British Gas did reduce customers' bills in March and April 2007, but consumer group Energywatch says energy companies did not pass on the full reduction to householders.

It has called for a Competition Commission investigation into the way the energy market works.

Rising bills

Dave Prentis, general secretary of Unison, said the increase in British Gas profits was "obscene".

"The unjustifiable price increases are burning a huge hole in customers' pockets and causing misery to millions," Mr Prentis said.

"British Gas should hang their heads in shame knowing that many people, including families, pensioners and the disabled, are too scared to heat their homes adequately this winter, because of the huge bills that follow," he said.

Consumers will feel justified in claiming that they are being taken for a very rough ride by energy companies Adam Scorer, Energywatch

In a BBC interview, Centrica chief executive Sam Laidlaw said the company would use the profits to reduce the UK's growing reliance on imported gas.

"We need to earn a return to invest in new sources of energy for the UK. Centrica is investing £1bn a year in new sources of gas and power... and all of that requires a return," Mr Laidlaw said.

Since 2003, the average gas bill for British Gas customers has risen by 76.7% to £653, according to consumer group Energywatch.

Electricity bills have risen by 74.3%, to £413.

Dividend up

Centrica has increased its full-year dividend to shareholders by 17% to 13 pence a share, a move criticised by Energywatch.

"It is perfectly true that there is volatility in wholesale energy markets. But it seems equally true that such volatility hits consumers not shareholders," said Adam Scorer, Energywatch's director of campaigns.

"Consumers will feel justified in claiming that they are being taken for a very rough ride by energy companies," he added.

Centrica said customer service at British Gas had "significantly improved", with 200,000 customers returning in the second half of last year.

Overall, the number of gas customers fell in 2007 by 2.4% to just over 10 million, while the number of electricity customers rose by 4.5% to just over six million.