Powergen customers are facing further price rises

It is the fourth time that the firm has raised its gas prices and the third time it has increased its electricity prices since January 2004.

Powergen blamed the prices hikes on an "unprecedented" increase in the wholesale cost of fuel.

At the same time, the firm announced an �18m package for the most vulnerable of its six million customers.

POWERGEN'S PRICE RISES Electricity price increased by 6.9% January 2004 Electricity price increased by 8.9% November 2004 Gas price increased by 4.9% January 2004 Gas price increased by 3.1% in September 2004 Gas price increased by 9.6% in November 2004

"The UK is in an era of rising energy prices and we, like all energy suppliers, are under tremendous pressure," said Nick Horler, managing director of Powergen retail.

The firm added that the wholesale cost of electricity had gone up by 23% since November while gas had risen by 35% in the same period.

In response, Adam Scorer, spokesman for consumer group Energywatch, said that energy firms were still making large profits despite the rise in wholesale prices.

"In this case my sympathy is with Powergen's six million customers and not with the firm," Mr Scorer said.

In a bid to cushion the blow of the price hike, Powergen said that people over the age of 60 would be able to apply for grants to help with the cost of installing cavity wall insulation.

In addition, customers paying by direct debit would be entitled to a 10% discount.