The biggest household gas and electricity supplier said it was “reluctantly” announcing the price increase of an average 5.5% for a typical dual fuel customer.
British Gas owner Centrica blamed the price hike – which comes into force on 29 May – on rising wholesale and Government policy costs and said it would impact 4.1 million customers.
It highlighted the smart meter roll-out, as well as schemes to reduce carbon emissions, and suggested “all Government policy costs should be paid for in a fairer way such as through general taxation”.
But Energy Minister Claire Perry said she was “disappointed” by the hike which she said was “unjustified… when customers are already paying more than they need to”, and urged customers to switch suppliers.
“This is why government is introducing a new price cap by this winter to guarantee that consumers are protected from poor value tariffs and further bring down the £1.4 billion a year consumers have been overpaying the Big Six,” she said.
“Switching suppliers will always help consumers get the best deal, saving £308 by switching from a default tariff offered by the Big Six.”
British Gas announced plans in November to scrap the standard variable tariffs (SVTs) for new customers ahead of Government plans to impose a price cap on them.
The controversial default tariff has no end date and is used by the majority of its customers.
A failure to switch means almost half of UK households remain on standard variable tariffs (SVTs) – often the most expensive type of energy bill as customers default to them when fixed-cost deals expire.
British Gas said it stopped selling SVTs to new customers on 31 March and all existing customers were being “contacted to encourage them to choose one of our fixed-term deals”.
The price hike will not affect the firm’s 3.7 million customers who are on fixed-term contracts, prepayment meters or classed as vulnerable, it added.
Mark Hodges, chief executive of Centrica, said: “We fully understand that any price increase adds extra pressure on customers’ household bills.
“The Government’s energy policies are important but they are also pushing up customers’ bills.
“We believe the Government should level the playing field so the customers of all suppliers pay a fair share of energy policy costs.
“We continue to encourage the Government to consider moving these costs out of energy bills altogether and into general taxation,” he added.
All energy firms have been facing pressure for some time over the way they treat their customers.
In February, MPs called for a cap on the price of gas and electricity amid fears consumers are being “ripped off”.
A report by the Business, Energy and Industrial Strategy (BEIS) Select Committee found customers were paying £1.4bn a year more than they should be.
Draft legislation for an absolute cap on energy tariffs was published by the Government last year.