Gas bills are set to rise again next year

Centrica said volatile wholesale gas prices meant trading conditions would remain "challenging", warning of more job cuts in order to save costs.

British and Scottish Gas put up bills 15% in September, but their residential businesses have since made a loss.

The firm warned that further increases were likely, as the wholesale price of gas had risen by 40% since then.

Customer losses

Centrica said it believed other energy suppliers would be forced to raise their prices next year to recover the cost of rising wholesale prices.

September's price rise contributed to the loss of 160,000 customers in the second half of the year.

Consumers will face another year of price increases Centrica Check Centrica's share price

However, Centrica said customer defections were not as severe as in the same period last year when 764,000 changed suppliers following price hikes.

Centrica said it would need to cut costs further in an effort to save an additional �30m by 2007.

It is already cutting 2,000 jobs in the UK.

Further jobs, as yet unspecified, are to go in the firm's corporate and support operations.

"Consumers will face another year of price increases as all suppliers look to recover higher wholesale costs," Centrica said in a statement.

"With continuing wholesale commodity price volatility, 2006 will be a challenging year for Centrica."

Centrica's shares rose 1% following its announcement.