British Gas will make £1.9 billion this year as millions of householders brace themselves for price increases of 40 per cent this winter, expected to plunge more pensioners into energy poverty.

The firm, which has gave a short trading update, is almost certain to hit 15.9 million customers with higher bills later this year as Centrica, British Gas’ parent, takes what it described as “necessary action” to rebuild margins at its residential business operation.

The £1.9 billion will be below last year’s operating profit of £2.2 billion and Centrica warned last month that soaring wholesale gas costs would lead to “materially lower” profits.

British Gas along with the other five big suppliers has been struggling with big rises in the cost of wholesale gas.
Customers are still angry that British Gas made profits of £533 million in the first six months of 2007 but delayed passing on cheaper costs to customers.

Some analysts are forecasting that the residential business could make a first-half loss this time.

Malcolm Wicks, Energy Minister, said significant increases in gas and electricity prices were “very likely.”

In the update Centrica said British Gas continued to trade in line with the guidance given in May when it reported a “very challenging outlook” for energy firms.