An energy company whose customers were hit with bill hikes of 9% last month reported a 38% jump in half-year profits to nearly £400 million today.

SSE, which trades as Scottish Hydro, Southern Electric, and Swalec and is the UK's second-largest generator of electricity, also increased its dividend for shareholders by 5% to 25.2p a share.

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But the company defended the increases and pointed out that its household energy supply business, which returned to the black over the period with profits of £48.7 million, accounted for 8% of total operating profits.

SSE chairman Lord Smith of Kelvin said: "I believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs, while providing an income return that shareholders like pension funds need."

He said energy market conditions remained challenging, with the prices achieved by SSE for its power generation still weak and higher costs forcing the latest rise in energy bills from all but one of the "big six" firms. SSE supplies electricity and gas to 9.6 million household and business accounts.

Caroline Flint, Labour's energy spokeswoman, said: "People will not understand how the energy giants can get away with inflation-busting price rises this winter when their profits are already increasing."