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Npower electricity and gas price rises will add £109 to typical bill Npower prices hike sparks crackdown threat against energy providers
(about 4 hours later)
Npower is hiking prices for more than a million customers who will see their dual fuel bill rise by an average of 9.8% or £109 a year, in a move that has prompted widespread anger among consumer groups. The government has threatened a fresh crackdown on energy providers after npower hiked prices for more than a million customers by 9.8% – adding £109 a year to bills.
The “big six” energy provider said the rise would affect about half of its customers, or 1.4 million households. From 16 March, npower will raise electricity prices by an average of 15% and gas prices by 4.8%. A spokesman for the prime minister said ministers would intervene if the energy market was shown to be failing. “Obviously, we are concerned by npower’s planned increases. The government is committed to getting the best deal for households,” he said.
The company blamed the rise on increases in wholesale gas and electricity costs and the cost of delivering government policies, such as smart metering and subsidies for renewable energy. “Suppliers are protected from the recent fluctuations in the wholesale energy prices in which they are buying up to two years in advance. So we expect energy companies to treat their customers fairly, and are being clear that where markets aren’t working we are prepared to act.”
Npower, one of the big six energy providers, said the rise in dual fuel bills would affect about half of its customers, or 1.4m households. From 16 March, it will raise electricity prices by an average of 15% and gas prices by 4.8%. Other big six providers are expected to follow with increases.
With average household bills for npower’s dual fuel customers expected to increase from £1,077 to £1,187 a year, Claire Osborne, energy expert at the price comparison website uSwitch, said: “This price rise – the largest single rise from a big six supplier since 2013 – is a bitter blow for consumers who have just come out of a very chilly winter.
“Npower has blamed the rise on the increased cost of buying energy in global markets – but they weren’t so quick to reduce energy bills when wholesale prices were low.”
The average dual fuel bill in the UK is £1,066.
The move comes a fortnight after the industry regulator, Ofgem, warned the big six against raising prices, saying it was “not obvious” that tariffs should go up despite rising wholesale prices. But energy companies have so far escaped a severe regulatory crackdown. Concluding an inquiry into the sector last year, the competition watchdog declined to cap bills and instead opted to help customers switch to cheaper deals.
Npower blamed its planned rises on increases in wholesale gas and electricity costs and the cost of delivering government policies, such as smart metering and subsidies for renewable energy. It said wholesale electricity prices had risen 38% over the last 12 months, while gas prices had risen 60%.
Simon Stacey, the company’s managing director of domestic markets, said: “This is a hugely difficult decision, and we have delayed the date this takes effect until after the coldest months of the year. We have also made sure that our most vulnerable customers won’t see any impact until May.”Simon Stacey, the company’s managing director of domestic markets, said: “This is a hugely difficult decision, and we have delayed the date this takes effect until after the coldest months of the year. We have also made sure that our most vulnerable customers won’t see any impact until May.”
Consumer groups said the move would put further pressure on household finances and urged energy customers to shop around to get a cheaper deal.Consumer groups said the move would put further pressure on household finances and urged energy customers to shop around to get a cheaper deal.
With average household bills for npower’s dual fuel customers set to go up from £1,077 to £1,187 a year, Claire Osborne, energy expert at the price comparison website uSwitch, said the move was a “bitter blow” for consumers.
“This price rise – the largest single rise from a big six supplier since 2013 – is a bitter blow for consumers who have just come out of a very chilly winter,” she said.
“Npower has blamed the rise on the increased cost of buying energy in global markets – but they weren’t so quick to reduce energy bills when wholesale prices were low.”
Hannah Maundrell, editor-in-chief of the comparison site money.co.uk, said the price hikes were unfair.Hannah Maundrell, editor-in-chief of the comparison site money.co.uk, said the price hikes were unfair.
“This is a slap in the face for many already struggling families,” she said. “It is a stark reminder that we all need to be tightening our purse strings to cope with price rises and looking where we can make savings.”“This is a slap in the face for many already struggling families,” she said. “It is a stark reminder that we all need to be tightening our purse strings to cope with price rises and looking where we can make savings.”
Npower is the second of the big six suppliers to announce price rises, after EDF Energy said in December its standard dual fuel direct debit price would increase by 1.2% to £1,082 a year. German-owned npower is the second of the big six suppliers to announce price rises. EDF Energy said in December its standard dual fuel direct debit price would increase by 1.2% to £1,082 a year.
Martin Lewis, founder of MoneySavingExpert.com, said the remaining four of the big six providers were likely to follow and urged consumers to take matters into their own hands by demanding a cheaper deal. Martin Lewis, founder of MoneySavingExpert.com, said the remaining four of the big six – British Gas, E.ON, Scottish Power and SSE – were likely to follow and urged consumers to take matters into their own hands by demanding a cheaper deal.
“Almost certainly by the end of April we will have seen all the big six firms having hoicked their prices by between 5% and 10%,” he said.“Almost certainly by the end of April we will have seen all the big six firms having hoicked their prices by between 5% and 10%,” he said.
“Do not groan, moan or whinge. Take action. Everybody, with every firm, should make sure they’re on the very cheapest tariff. The best thing to do is a whole-of-market comparison, but even if you’re not willing to do that, call up your existing company and say ‘Am I on your cheapest deal?’ Most people aren’t, and hundreds can be saved just by one phone call.” “Do not groan, moan or whinge. Take action. Everybody, with every firm, should make sure they’re on the very cheapest tariff. The best thing to do is a whole-of-market comparison, but even if you’re not willing to do that, call up your existing company and say: ‘Am I on your cheapest deal?’ Most people aren’t, and hundreds can be saved just by one phone call.”
A spokesman for the Department for Business, Energy and Industrial Strategy said the government was concerned about npower’s decision to raise prices.
“This government is committed to getting the best deal for households and is concerned by npower’s plans to increase prices for customers who are already paying more than they need to. Suppliers are protected from recent fluctuations in the price of wholesale energy, which they buy up to two years in advance, and prices remain significantly lower than in 2014,” he said.
“We expect energy companies to treat all their customers fairly and have been clear that, wherever markets are not working for consumers, we are prepared to act.”
The government is expected to address concerns about the energy market when it publishes a consumer green paper in the spring.The government is expected to address concerns about the energy market when it publishes a consumer green paper in the spring.
A two-year investigation by the UK’s competition watchdog concluded last June that 70% of domestic customers of the big six companies – British Gas, EDF, E.ON, npower, Scottish Power and SSE – were on expensive standard variable tariffs and could save more than £300 by switching to a cheaper deal. Iain Wright, the Labour MP who chairs the House of Commons’ business, energy and industrial strategy committee, said the price hikes showed that npower took its loyal customers for granted.
As a result, customers have been paying £1.4bn a year more than they would in a fully competitive market, the Competition and Markets Authority found. “This is one of the biggest price increases from a big six energy company, a company which regularly comes bottom of tables for customer service.
“It comes just days after npower admitted to the BEIS committee that their business model involves standard tariff customers who have been with the company for a long time subsiding new customers enticed by cheap deals.
“Customers who stay loyal to an energy company, often on the most expensive tariff, should be rewarded with a discount in their bills, not penalised with a massive price hike.”
A two-year investigation by the Competition and Markets Authority concluded last June that 70% of domestic customers of the big six were on expensive standard variable tariffs and could save more than £300 by switching to a cheaper deal.
As a result, customers have been paying £1.4bn a year more than they would in a fully competitive market, the CMA found.