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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  • rate this
    +3

    Comment number 276.

    So their 'margin' is 5%.....my grandmother's margin is life or death through hypothermia!

  • rate this
    0

    Comment number 275.

    Instead of moaning just switch supplier, I just did and got a nice fixed rate with another supplier - saving me money,

  • rate this
    0

    Comment number 274.

    234 hardworkedandunderpaid
    3 Minutes ago

    'The regulators do nothing.'

    What wait ...there are 'regulators' ?

    Oh my we are saved...we see how well 'regulators' have done in the media and the sterling job they did in the banking industry,
    No problem then...we have 'regulators' and everything!
    (Useless gravy train toe-rags the lot of 'em!)

    I hope the investors are proud of their business acumen!

  • rate this
    +3

    Comment number 273.

    Nationalise it again.

  • rate this
    +1

    Comment number 272.

    These greedy corporations do not need to raise prices to "invest". They need to raise prices to feed their bulging executive pockets! They are already showing vast profits and should be reducing prices! The government should step in here and freeze their price structures for the next 5 years, at least. These obscene companies have far too much power, and it should be forcibly removed from them.

  • rate this
    +4

    Comment number 271.

    256 Bagwag
    Your superior non plebby school was not very good teaching spelling it SEEMS

  • rate this
    +4

    Comment number 270.

    Woodburner is the way to beat these thieves , got 6+ tons of wood in the garden ready to burn , all of it for free . When i have it lit my kids complain they are to hot. And i have a smug sense of self satisfaction knowing they will get not 1p more out of me.

  • rate this
    +3

    Comment number 269.

    This is another example of corporate greed. We've seen the same from Orange, O2 and Vodafail.

    We have all these corporations that are profiteering and not paying any taxes and meanwhile the man is the street who relies on their services gete right royally screwed.

    Love this country, it's so well governed by out ConDem Gov't.

  • rate this
    0

    Comment number 268.

    186. realmystery
    Couldn't agree more...My wife is German, she can't believe the government allow this to happen..."

    Hmm, interesting.

    Retail price of electricity in the UK - about 12p/kWh
    Retail price of electricity in Germany - about 22p/kWh
    Gas is 4p in UK, 5p in Germany
    (www.energy.eu)

    And your German wife thinks the *UK* government is doing things wrong?

  • rate this
    0

    Comment number 267.

    Just don't get suckered in to fixing your tariff. Every time they get enough people on fixed tariffs the cost comes down. Funny that. I can't think why.
    I find it infuriating how the energy companies pray on people who are worried they may not be able to heat their homes.

  • rate this
    0

    Comment number 266.

    When the commodities were de-regulated. the government promised the electorate that competition would bring prices down. Initially it did, but, when the good competitors were destroyed by the banks or bought out by the big comglomerates, then competition went out the window. Most are now owned by Germany, France or America and they are making BIG bucks at our expense. Haras your MP to nationalise

  • rate this
    +3

    Comment number 265.

    @230 Paul
    At the moment, renationalisation is just not an option - there's no money to do it.

    Just shred the shares and use them to fuel power stations and pass the savings onto the customers. Total cost £0

  • Comment number 264.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 263.

    Scottish Hydro increase for their Economy 10 tariff is a whopping 17.5% NOT the advertised 9%. Cannot complain to the ombudsman as they do not recognise price increase complaints - Scottish hydro recommend switching supplier - can you believe that suggestion! - I took it and switched !!

  • rate this
    -1

    Comment number 262.

    If we would harness all the hot air being spouted on here all our energy troubles would be over.

  • rate this
    0

    Comment number 261.

    wait forn the great green initiative MARKET PRICE DISCOVERY

  • rate this
    0

    Comment number 260.

    Absolutely furious. I am a single person living alone, I can barely afford to fork out anymore for my utility bills, moving back in with my grandparents at 29 years of age may have to be my only way out oh but wait I can't sell my house because noone is buying them due to mortgage rates so im stuck. I hope there is a revolt because I would gladly join it, we put up with these increases too easily

  • rate this
    0

    Comment number 259.

    Was it the wet summer or the poor harvest? one raises prices and they all do. NATIONALISED utility companies are best- at least you know where you stand and who to deal with. These cartels are supposedly competing. I dont see much of it.

  • rate this
    0

    Comment number 258.

    I live in a parkhome, 75% of my heat goes out through the walls, I cant have cavity wall insulation done as its not brick built.
    My home and thousend others like mine are failing the goverments targets on green energy and nothing is being done.
    Two thirds of these propertys are lived in by pensioners, .So more big bills are on the way...Something must be done !!!

  • rate this
    +3

    Comment number 257.

    What a great country we live in, DC takes about us all in together to sort out the country problems, but we can give 12 billion pounds away in overseas aid while our pensioners freeze because of high energy prices. Our hospitals lack funds so they have to cut back treatment and staff and we call our selves a civilised country when we can't look after our own citizens.

 

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