Npower and British Gas raise energy prices

 

Richard Lloyd of Which? talks about his "shock and disbelief" at the price rises

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Npower has joined rival British Gas in announcing it is increasing gas and electricity prices in the UK.

Npower will increase the price of gas by an average of 8.8% and electricity by 9.1% from 26 November.

Earlier, British Gas, the UK's biggest energy supplier, raised its charges for both types of fuel by an average of 6%, adding £80 a year to the average dual fuel bill.

The firms both blamed the government's policies as well as wholesale prices.

SSE - which trades as Scottish Hydro, Swalec and Southern Electric - has already said it will raise its prices by an average of 9% from Monday.

"There is never a good time to increase energy bills, particularly when so many people are working hard to make ends meet," Npower's chief commercial officer Paul Massara said.

"But the costs of new statutory schemes, increases in distribution charges and the price of gas for the coming winter are all being driven up by external factors, for example government policy."

British Gas recognised that its increase, which will take effect from 16 November, would be "unwelcome".

It also warned that the rising cost of government energy policies, including boosting renewable energy, improving households' energy efficiency and helping the poorest customers, was likely to add even more to household bills next year.

The cost of government policies and the national grid upgrade added £50 to the average household bill this year, and is expected to add another £60 next year, British Gas said.

Rising costs

Case study

British Gas customers Heather and Gabriel Manzolini are a retired couple from Romford.

We're already paying £1,750 for council tax while our home fuel bill is nearly £1,200 a year and now it's just going to go up.

We only renewed our contract with British Gas two weeks ago so we're not happy at all.

We've tried to make our house as energy efficient as possible - there's nothing more we can do.

We need heat. I am recovering from cancer [and] my husband Gabriel had a stroke.

Gabriel was given a heating allowance aged 60 when he didn't need it; he was ashamed as he was in a full-time job. But now when we need it, it has halved - everything goes up day-by-day while our pension goes down.

We'll have to cut back on everything and turn the heating down as low as possible. We'll have to wear a lot of wool, too, and cut down on our other costs - such as spending on food.

Speaking to the BBC, Richard Lloyd of consumer group Which? criticised the lack of competition in the energy market.

"What we need to see is action from the government and more pressure on... these very big lazy companies who think it's OK to clobber people with above-inflation price rises at the very time when they can least afford it," he said.

Watchdog Consumer Focus said two price rises in one day would add to householders' worries that they were not getting a fair deal.

"Unless they can be reassured about the relationship between costs, prices and profits, consumer distrust will continue," said Consumer Focus director Audrey Gallacher.

British Gas managing director Phil Bentley claimed that 85% of the price it charged to customers was outside its control.

"Britain's North Sea gas supplies are running out and British Gas has to pay the going rate for gas in a competitive global marketplace," said Mr Bentley.

"Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers' homes, and the costs of the government's policies for a clean, energy-efficient Britain, are all going up."

It said that winter wholesale prices it pays were proving to be some 13% higher this year.

Speaking to the BBC, Mr Bentley pointed out that although wholesale prices are actually currently lower than a year ago, British Gas, like most utilities, fixes the price at which it buys gas well in advance, and these fixed prices had risen.

The company reported £345m profit in the first half of the year, but the chief executive said that he expected profits to be down in the second half.

"Our margins are 5p in the pound," he told the BBC. "That 5p is going into jobs for Britain, investments in new wind farms, investments in new gasfields."

Graph showing the typical electricity bill over time
Insulation

Despite rising prices, the number of people switching suppliers is falling, which consumer groups suggest is more evidence of lack of trust in the market.

"The recent price increases mean it is more important than ever that consumers are able to shop around for the best deal," said regulator Ofgem.

"Next week we will be announcing the next steps in introducing major reforms to make the household energy market simpler, clearer and fairer for customers," it said.

Consumer Focus said that the government and the energy regulator should do more to protect households from the effect of growing energy costs.

Graph showing typical gas bill over time

"From next year, an average of £4bn will be taken from consumer bills in the form of carbon taxes," Audrey Gallacher said.

"Using a proportion of that revenue to fund a much more ambitious energy efficiency programme could start to tackle fuel poverty and provide a jump start to our energy efficiency industry."

All the energy utility firms are obliged under the government's "Certified Emissions Reduction Target" (or "Cert") programme to cut the carbon dioxide output by households.

British Gas extended its offer of free loft and wall cavity insulation to non-customers earlier this year. Consumer groups suggested the company had done this because it risked missing targets.

British Gas claimed that customers that had already implemented energy saving measures had seen their fuel consumption drop by up to 40%, and as a result the average total fuel bills of its customers had not risen faster than inflation, despite the increases in fuel charge rates.

In addition, under the government's Warm Home Discount Scheme which began last year, energy suppliers agreed to give discounts on energy bills to older households who receive certain benefits.

Speaking to the BBC, energy minister Greg Barker said the scheme would mean two million of the poorest families would get £130 towards energy bills.

Labour said it would introduce a new energy regulator with powers to force energy companies to pass on savings to consumers and automatically put over-75s on the cheapest deal.

Energy price changes since Nov 2010

Scottish Power SSE British Gas Npower E.On EDF

G=Gas. E=Electricity.

Nov 2010

G:2% E:8.9%

Dec

G:9.4%

G:7% E:7%

Jan 2011

G: 5.1% E: 5.1%

Feb

G:3% E:9%

Mar

G:6.5% E:7.5%

Aug

G:19% E:10%

G:18% E:16%

Sept

G:18% E:11%

G:18% E:11%

Oct

G:15.7% E:7.2%

Nov

G:15.4% E:4.5%

Jan 2012

E: -5%

Feb

G: -5%

G: -5%

E: -6%

G:-5%

Mar

G:-4.5%

Oct

G: 9% E:9%

Nov

G:6% E:6%

G:8.8% E:9.1%

 

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Comments

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  • rate this
    +3

    Comment number 196.

    Christmas is coming, the gas is going up!

    As will Petrol, Food, Electricity etc This always happens and its not right!

    There is a dfference between Profit and Profiteering.................... I thought was immoral or ilegal or both...........

  • rate this
    +3

    Comment number 195.

    Sid has got a lot to answer for........

  • rate this
    +3

    Comment number 194.

    Was furious with British Gas during the summer when they arbitrarily tripled my monthly gas direct debit the day after announcing an increase in profits, yet my gas usage had gone down.

    Have now switched to a supplier who bills quarterly and in arrears. Whilst I may not benefit from a so-called direct debit "discount", I at least get to pay for the gas I use and I regain control of when I pay.

  • rate this
    +5

    Comment number 193.

    Tiny tim (139) is absolutely right about the elderly being vulnerable. Don't forget, David Cameron also CUT the pensioners Winter fuel allowance by £100 a year when he first got into office. Still - as long as the spivs make their money, no-one else matters.

  • rate this
    +1

    Comment number 192.

    Take a shower with a friend and save money on your energy bill. Simple.

  • rate this
    +16

    Comment number 191.

    We were told that privatisation would reduce prices due to competition.

    What Competition???

    It’s just a cosy little cartel, I thought that was illegal

  • rate this
    +2

    Comment number 190.

    It's hardly competition is it? One increases the price of fuel and they all follow suit.

  • rate this
    -3

    Comment number 189.

    133. postingdude. As none of the suppliers are an integrated business, but a retail only they don't look as if they're ripping you off because they're not. The wholesalers and distributors are separate companies over which the retail suppliers have no control. This 'debate' should be more about the structure of the energy industry rather than bashing retailers who are struggling to contain costs.

  • rate this
    +14

    Comment number 188.

    Looks like i'm going to go cold this winter then - Tory britain, who wants it..

  • rate this
    -19

    Comment number 187.

    How can anyone moan about a company making just 5% profit? and what the hell has it got to do with the government? people need to get real and stop being stupid, read and learn a little, stop having kids, stop buying Iphones and flat screens and pay for a service if you want it,

  • rate this
    +34

    Comment number 186.

    "People are choosing between food and heat. The Government should be ashamed of themselves. I'm ashamed to live in a country where old people chose between food and heat. It's simply disgusting."

    Couldn't agree more...My wife is German, she can't believe the government allow this to happen...nor can I. What an appalling situation for people to be in.

  • rate this
    +6

    Comment number 185.

    What on earth is the point of Ofgem or "switching" energy supplier? I have just changed from SSE to Scottish Power (SSE prices up last month) no doubt Scottish Power will put their prices up in the next few days.

    There's absolutely no point in shopping around when it's a cartel/monopoly.

    British Gas had PROFITS of £345m for the FIRST 6 MONTHS of 2012 !!

    We're just fodder for their fat bonuses.

  • rate this
    +7

    Comment number 184.

    YES I GUESS THE GOVERNMENT IS LAUGHING ALL THE WAY TO THE BANK AS THERE WILL BE THE 5% VAT TO BE ADDED TO THESE ENERGY PRICES RISES. ALSO THE BIG SUPERMARKETS WILL BE PASSING ON THERE ENERGY PRICES INCRESES IN THE FORM OF HIGHGER FOOD PRICES IN THERE STORES.... SO IT A DOUBLE HIT FOR THE CONSUMER.. AND DOES THE GOVERNMENT REALLY CARE ... NO I DONT THINK SO ...

  • rate this
    +3

    Comment number 183.

    When the government opened up themarket they said prices would fall as there would be more suppliers. There are only six and those six will not allow any more. This has been a failure.

    When OFGEM was set up it was supposed to regulate and stop the companies from being a cartel. It has not and this has been another failure.

    We must privatise these companies before more people die from cold.

  • rate this
    +1

    Comment number 182.

    The shrill whines of how much their cost have increased don't impress. Where's the evidence? Let's have a breakdown of where they are having to pay more for the same services.

    Maybe it's time to say NO, I'm not paying more. My boss did, last time I asked for a raise on the grounds that MY living costs had risen.

  • rate this
    0

    Comment number 181.

    @160. mattahew read the small print! Ebico work 'in partnership with SSE' one of the big 6 to supply electricity and gas!

  • rate this
    +2

    Comment number 180.

    A useful observation - in Oct 2005 customer bills were 25% greater than wholesale bills. In Oct 2012 customer bills are 48% greater than wholesale bills. I make that a 23% increase in profit for the corporation and/or govt.

  • rate this
    +4

    Comment number 179.

    I suggest all contributors look at the data above particularly the red line in the graphs - the rolling net margin.

    -This margin is shown after deduction of the 7 figure salaries,bonuses and expenses of these companies fat cats.
    Necessary running costs?

    The CEO of the NHS , 50 times the size of British Gas, gets paid 10% as much as BG's CEO

    Renationalise and get rid of these parasites

  • rate this
    +5

    Comment number 178.

    You could argue that the Government and the energy companies are helping consumers by offering grants to help them insulate their homes - until you see the criteria. Cavity walls and lofts - fine! But If you live in a 19th century terraced house, don't have a loft and your windows are single glazed, you aren't eligible. Think I'll buy some extra jumpers - cheaper, greener and more stylish!

  • rate this
    +1

    Comment number 177.

    this government is a farce letting these companies get away with this,it was shown on many a TV program that once one of the big suppliers rises the others follow...and this isn't price fixing!!!!

 

Page 33 of 42

 

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