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| Npower announces 'shocking' rise in energy prices | |
| (35 minutes later) | |
| Npower has announced one of the largest price rises implemented by a "Big Six" energy supplier for years. | |
| The company will raise standard tariff electricity prices by 15% from 16 March, and gas prices by 4.8%. | The company will raise standard tariff electricity prices by 15% from 16 March, and gas prices by 4.8%. |
| A typical dual fuel annual energy bill will rise by an average of 9.8%, or £109. | A typical dual fuel annual energy bill will rise by an average of 9.8%, or £109. |
| Ofgem said Npower would have to justify the decision to its customers. And Paul Massara, a former boss of the company, called the rises "shocking". | Ofgem said Npower would have to justify the decision to its customers. And Paul Massara, a former boss of the company, called the rises "shocking". |
| Npower said the changes would only affect about half of its customers. The other half are on fixed-term deals and will see no price rise. | Npower said the changes would only affect about half of its customers. The other half are on fixed-term deals and will see no price rise. |
| However, 1.4 million customers on existing standard tariffs will be offered a four-year fixed-price tariff with a 4.8% discount. | However, 1.4 million customers on existing standard tariffs will be offered a four-year fixed-price tariff with a 4.8% discount. |
| The rise in electricity prices is thought to be the largest since 2008, when some suppliers increased charges by up to 19%. | |
| Some gas prices went up by a similar amount in 2011. | |
| Justification | |
| Npower blamed increases in wholesale energy costs, and the cost of delivering government policies such as smart meters and the renewables obligation. | Npower blamed increases in wholesale energy costs, and the cost of delivering government policies such as smart meters and the renewables obligation. |
| However, two weeks ago the regulator, Ofgem, told suppliers they should absorb the costs of wholesale price rises by buying energy in advance. | However, two weeks ago the regulator, Ofgem, told suppliers they should absorb the costs of wholesale price rises by buying energy in advance. |
| In a statement on Friday, Ofgem said that wholesale costs had risen in the past year, after falling over the previous two to three years. | |
| "However, we don't see any case for significant price increases where suppliers have bought energy well in advance. Npower must therefore justify the decision to its customers," a spokesperson said. | "However, we don't see any case for significant price increases where suppliers have bought energy well in advance. Npower must therefore justify the decision to its customers," a spokesperson said. |
| Former Npower boss Paul Massara - who now runs an alternative energy company - called the rise "shocking" in a tweet. | |
| 'Difficult decision' | |
| The announcement comes after three other suppliers - British Gas, E.on and SSE - announced they would keep prices on hold until the end of March. | The announcement comes after three other suppliers - British Gas, E.on and SSE - announced they would keep prices on hold until the end of March. |
| EDF cut its gas prices by 5.2% last month, but will raise electricity charges by 8.4% from 1 March. | EDF cut its gas prices by 5.2% last month, but will raise electricity charges by 8.4% from 1 March. |
| Npower said it was the first time it had raised prices for three years. | Npower said it was the first time it had raised prices for three years. |
| "This is a hugely difficult decision, and we've delayed the date this takes effect until after one of the coldest months of the year," said Simon Stacey, Npower's managing director of domestic markets. | "This is a hugely difficult decision, and we've delayed the date this takes effect until after one of the coldest months of the year," said Simon Stacey, Npower's managing director of domestic markets. |
| Pre-payment customers will not be affected by the increase, and 80,000 people who receive a warm home discount will in effect pay no increase until May. | Pre-payment customers will not be affected by the increase, and 80,000 people who receive a warm home discount will in effect pay no increase until May. |