Profits at British Gas jumped by more than three-quarters to £842m – but its parent company, Centrica, still warned consumers that bills will rise this winter.
A combination of cold weather, boosting demand for gas, and low wholesale prices helped the energy supplier to improve its profitability in the first half of the financial year.
In the residential division, where British Gas added 223,000 customers following a cut in prices at the start of the year, operating profits doubled to £585m.
Centrica's overall pre-tax profits quadrupled from £448m to £2bn over the half year period, despite reporting roughly flat revenue of £11.7bn. British Gas saw margins almost double from 7pc to 13pc.
Higher bills on the way
Despite the huge increase in margins, Centrica said higher energy bills are on the way due to slowly rising gas prices that are expected to increase still further this autumn.
Nick Luff, Centrica's finance director, gave a warning of the pain to come by claiming "wholesale gas and power prices are looking quite a lot higher for this coming winter."
Steven Jackson of Beatmydebt.com said that and price increases will be a bitter blow to customers. "There are many families struggling to make ends meet in the wake of reduced incomes and unemployment.
Wages are not likely to increase over the next eighteen months and rises in energy bills which can not be avoided will cause many people to get deeper into debt" he warned.
However, Sam Laidlaw, the chief executive, defended the group against accusations that energy suppliers will be quicker to pass on rises in the wholesale price of gas to customers than they were to lower bills when prices dropped last year.
"All the evidence is that price cuts are passed on as quickly as price rises," he said. "I can't say when we will need to raise them and we're deliberately not signalling when to the competition. We will try to delay it as long as we can."
Company looking to buy new assets
Operating profits in its upstream businesses, including producing gas fields bought from Venture in the North Sea and a stake in British Energy, rose from £334m to £435m.
The company is now looking for acquisitions, concentrating on upstream production assets North America.
"We will study shale gas to see if it could reduce the cost of bills for our customers but it looks like other types of field are our priority at the moment," Mr Laidlaw said.
Separately, Centrica said it was shelving one gas storage projects and will not make decisions on two more until next year due to lack of demand and regulatory uncertainty. The decision comes despite the UK coalition government's pledge to encourage gas storage to improve the country's energy security.