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| Gas and electricity prices may have to be raised further, says Energy UK | |
| (about 2 hours later) | |
| Britain’s big six energy suppliers are under pressure to pass on more price hikes to consumers’ energy bills, the industry trade body has warned. | Britain’s big six energy suppliers are under pressure to pass on more price hikes to consumers’ energy bills, the industry trade body has warned. |
| Npower, EDF and Scottish Power have already announced price rises for millions of customers, blaming a mix of rising wholesale costs, installation of smart meters and government policies paid for through bills. British Gas has frozen prices until August, while SSE and E.ON have yet to declare their intentions. | Npower, EDF and Scottish Power have already announced price rises for millions of customers, blaming a mix of rising wholesale costs, installation of smart meters and government policies paid for through bills. British Gas has frozen prices until August, while SSE and E.ON have yet to declare their intentions. |
| The chief executive of Energy UK, which represents most of the 40-plus energy suppliers, told MPs on Wednesday that the rises were justified. | The chief executive of Energy UK, which represents most of the 40-plus energy suppliers, told MPs on Wednesday that the rises were justified. |
| “It is plain that we have seen increases in wholesale prices over the last 12 months or so, and we can see going out into the future there are continuing pressures there,” said Lawrence Slade. He said month-ahead wholesale gas prices for March were 100% higher than last year, and electricity was up 69%. | “It is plain that we have seen increases in wholesale prices over the last 12 months or so, and we can see going out into the future there are continuing pressures there,” said Lawrence Slade. He said month-ahead wholesale gas prices for March were 100% higher than last year, and electricity was up 69%. |
| In addition, the cost of government policies, such as subsidies added to bills to support renewable power, “should not be underplayed”, he said. Such costs would make up £120 to £140 of the average annual household energy bill next year, Energy UK said. | In addition, the cost of government policies, such as subsidies added to bills to support renewable power, “should not be underplayed”, he said. Such costs would make up £120 to £140 of the average annual household energy bill next year, Energy UK said. |
| Slade refused to say whether he thought Npower’s recent electricity price increase of 15% was acceptable and said he had no knowledge of individual companies’ future pricing plans. | Slade refused to say whether he thought Npower’s recent electricity price increase of 15% was acceptable and said he had no knowledge of individual companies’ future pricing plans. |
| But the head of the energy regulator, Ofgem, dismissed the idea that government policies or smart meters were adding significantly to suppliers’ costs, and said increasing fossil fuel prices were the main pressure. | But the head of the energy regulator, Ofgem, dismissed the idea that government policies or smart meters were adding significantly to suppliers’ costs, and said increasing fossil fuel prices were the main pressure. |
| Dermot Nolan told MPs on the Commons business, energy and industrial committee said: “There were comments by a number of firms saying it was government policy or smart metering [driving hikes]. I don’t think the government policy is particularly valid on this point. I don’t think smart metering by itself will be driving significant increases.” | Dermot Nolan told MPs on the Commons business, energy and industrial committee said: “There were comments by a number of firms saying it was government policy or smart metering [driving hikes]. I don’t think the government policy is particularly valid on this point. I don’t think smart metering by itself will be driving significant increases.” |
| He argued it was “hard for me to judge” whether Npower had justified the increase in its standard variable tariff. When pushed by the committee chairman, the Labour MP Iain Wright, on whether the regulator could cap such tariffs and if he was failing consumers by not doing so, the Ofgem chief executive said he did have such powers but the decision was one for policymakers, not him. | He argued it was “hard for me to judge” whether Npower had justified the increase in its standard variable tariff. When pushed by the committee chairman, the Labour MP Iain Wright, on whether the regulator could cap such tariffs and if he was failing consumers by not doing so, the Ofgem chief executive said he did have such powers but the decision was one for policymakers, not him. |
| Despite acknowledging that the big six still had an 84% share of the market, Nolan told the MPs that the energy market was becoming more competitive. In a reference to the challenger companies First Utility and Ovo, he said the UK was moving towards having a big eight rather than big six. | Despite acknowledging that the big six still had an 84% share of the market, Nolan told the MPs that the energy market was becoming more competitive. In a reference to the challenger companies First Utility and Ovo, he said the UK was moving towards having a big eight rather than big six. |
| Calls for a price cap, as proposed by the shadow chancellor, John McDonnell, are likely to be repeated in coming days. | Calls for a price cap, as proposed by the shadow chancellor, John McDonnell, are likely to be repeated in coming days. |
| On Wednesday, ScottishPower’s parent company, Iberdrola, announced net profit was up 11.7% to €2.7bn (£2.3bn) in 2016, and on Thursday the parent company of British Gas, Centrica, is expected to report that full-year earnings rose from £891m to £950m for its UK energy business. It is also anticipated that one of the medium-sized energy suppliers would announce a price rise on Thursday. | On Wednesday, ScottishPower’s parent company, Iberdrola, announced net profit was up 11.7% to €2.7bn (£2.3bn) in 2016, and on Thursday the parent company of British Gas, Centrica, is expected to report that full-year earnings rose from £891m to £950m for its UK energy business. It is also anticipated that one of the medium-sized energy suppliers would announce a price rise on Thursday. |
| John Penrose, a Conservative MP, has written to the business secretary, Greg Clark, urging him to impose a relative price cap, so standard variable tariffs were not more than 6% above the company’s best deal. | John Penrose, a Conservative MP, has written to the business secretary, Greg Clark, urging him to impose a relative price cap, so standard variable tariffs were not more than 6% above the company’s best deal. |