Shares in Centrica were up on the FTSE 100 after the group said that British Gas, which it owns, would be raising its domestic tariffs for gas and electricity by an average of seven per cent from 10 December.
Around eight million customers will be affected by the change, which will see the average weekly dual fuel bill rise by £1.50. Centrica said however that the rise would not affect its 300,000 "most vulnerable customers" until after winter, in addition its 1.6 million customers on fixed price deals will not be affected by the change.
Centrica said that the rise followed two years of price cuts by British Gas and would still leave average bills £108 lower than in January 2009.
The company said that the rise in prices was necessary because wholesale gas prices have gone up by over a quarter since the spring. However the company has also been hit by other costs, such as network charges and the cost of its environmental obligations, which have risen six per cent.
Phil Bentley, Managing Director of British Gas Managing Director, said, "We know that rising energy prices come at a difficult time for many in Britain. That's why we are not raising prices for our vulnerable customers, such as the poorest pensioners, until after this winter. We will continue to give them extra help - including lower rates - saving each an average of £128 per year.
"But higher prices needn't mean higher bills with the free energy efficiency help available from British Gas. This year alone, we've fitted more than 120,000 energy efficient boilers and carried out more than 270,000 loft and cavity wall installations in our customers' homes. We're offering free cavity wall insulation to our customers who are 60 years or over, which could save them up to £110 each year."
By 14:20 shares in Centrica were up 2.23 per cent on the FTSE 100 to 343.50 pence per share.