But British Gas chief executive Mark Hodges asserted "wholesale prices during the last 12 months have not gone down" and that the price hike was a result of other "cost pressures" from Government policies.
British Gas said its electricity prices would go up on September 15 and would mean an average dual fuel bill for a typical annual household tariff will rise by £76 to £1,120 - a 7.3 per cent increase.
Government sources reiterated Theresa May's threat to hit the industry with price capping if charges kept on being hiked.
With utility price rises across the board now looking more likely, we crucially need to review the key priorities across the United Kingdom before the coming winter - when 4 million households in the United Kingdom will face the brunt of fuel poverty.
Chief executive Ian Conn told the BBC Today programme: "Governments have had to make some very hard decisions about the future of the energy system and the way in which we now pay for that is through the bill".More news: Euro jumps to January 2015 highs on European Central Bank speculation
Mr Conn hit back saying: "Governments have had to make some very hard decisions about the future of the energy system and the way in which we now pay for that is through the bill".
SSE, Britain's second-biggest energy supplier, and rival Scottish Power last month anounced further customer losses, underscoring the increasingly competitive nature of a market that has attracted dozens of new entrants.
Details of the increase comes as Centrica revealed its earnings plunged by more than a quarter after it lost 377,000 United Kingdom customer accounts in the first half.
British Gas has today announced that it is hiking the cost of electricity by 12.5% or £76 a year for 3.1 million families.
"Energy firms should treat all their customers fairly and we're concerned this price rise will hit many people already on poor value tariffs", a spokeswoman for the Department of Business, Energy and Industrial Strategy (BEIS) said in a statement.More news: Bizarre own goal steals show as Inter Milan beat Chelsea
The so called "big six" of the UK's largest energy suppliers have a strong hold over energy prices, and successive governments and parties have pledged to introduce some form of price controls in recent years and decades.
He said that over that period, overall electricity costs have increased by 16 per cent.
"What we need - and what the Government should have done, because there was an agreement going into the election - is a price cap". This followed a government request to set out plans to help those placed on the poorest-value tariffs.
It comes after Centrica-owned British Gas saw profits tumble 26% to £381 million this year over warmer than normal temperatures and the pre-payment tariff cap.More news: US Officials Say North Korea Capable of Hitting US in 2018