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 296.

    Most amazing thing about this - British Gas just called me to re-join them as a customer... I pointed out to the lady that today, of all days, I was unlikely to rejoin. Apparently all the other companies will follow suit... like that makes British Gas more appealing? Shocked at their profits and the timing of their price increase.

  • rate this
    +7

    Comment number 295.

    prison is looking good, all your utility bills paid , 3 square meals a day , tv,xbox,free dentist,doctor no council tax and if they upset you a large cheque in the form of compo.

    perhaps the people who can't afford these charges should consider not paying the council tax bill issued in march, by the time you get your 6 month prison time it will be winter

  • rate this
    -1

    Comment number 294.

    http://ashadegreener.co.uk/

    Have a look at this company, You need to own your home to qualify. And they only fit in a certain parts of the country.

    Free solar panals.

  • rate this
    0

    Comment number 293.

    From gas privatisation until 2004 gas and electricity prices FELL vis a vis the nationalised era. Its since then that they've risen due to the fall in North Sea gas supplies and skyrocketing oil prices. Investment in has to come from somewhere, if not profits then taxpayers.So, I ask again, why nationalise ,and see if you can avoid the personal abuse this time.

  • rate this
    +1

    Comment number 292.

    Take all the energy companies back into public ownership, with the prices they are charging the government could soon pay off the countries debts. What a rip off.

  • rate this
    +3

    Comment number 291.

    And if you live in a Council property you're not eligible for free insulation from British Gas. I had a survey done of my loft insulation by my local authority and was told that because it was already of a minimum depth (6 cm) I couldn't have it topped up to the new recommended level so it looks like my heating bills are going to be through the roof literally!

  • rate this
    +4

    Comment number 290.

    All the time these companies are able to fleece the public they will.

  • rate this
    +3

    Comment number 289.

    "256.bagwag

    I assume those who gave me a negative (163) are all labour supporters who live on benefits, although you seam to have enough money for the internet."

    Or maybe people just don't happen to agree with you? It is permissible.

  • rate this
    -1

    Comment number 288.

    If the ultility companies are putting up their prices because of government introduced "new statutory schemes", then expect other firms to do the same.

  • rate this
    +1

    Comment number 287.

    Ripp Off Britain is alive and well...British Gas yet again show no heart.
    I feel the word 'British' should be removed from this company Logo so as not to confuse.

  • rate this
    +2

    Comment number 286.

    219.Colin Bartlett
    Some genuine friendly advice.. can they penalise you for leaving if they change the terms of contract mid term? We were with Atlantic (SSE), doing exactly the same, and we told them where to stick it.
    Check out Ebico - you sound like a low user.. we are and we did, and we are saving now.

  • rate this
    +1

    Comment number 285.

    British gas was sold off, it nolonger exists, what you have is a company that should never have been allowwed to continue to use the name, also the same with BR, You have been conned, you were warned beforehand, now we all suffer the consequences. The lunatics, or thieves, are running the show, we all need to seek asylum.

  • rate this
    -1

    Comment number 284.

    If anyone thinks energy prices will go down after privatisation they're wrong. Energy prices are on the increase due to the cost of 'renewable' energy and import of gas from abroad

  • rate this
    +1

    Comment number 283.

    @256 At least learn to spell correctly before you jump on your soap box. SEEM was the word you're looking for.

  • rate this
    -2

    Comment number 282.

    I see we have the fixers in the BBC mod room again comment 236 i moded up but the BBC fixers will not allow it to be increased is it back to biased Broadcast again ..

  • rate this
    +1

    Comment number 281.

    We continue to exploit the world's finite resources at an alarming rate, not to sustain us in the long term but in the interest of (relative) short term financial gain. Clearly there has to be some incentive for those prepared to work to make resources available but capitalism as we know it is proving absolutely not to be the answer in energy, transport, finance, manufacturing - everything.

  • rate this
    +2

    Comment number 280.

    Ah, I see its that time of year yet again when we get rinsed by the country's energy cartel.

    Expect some waffle from the minister for hand wringing & maintaining the status quo, followed by record profits for the energy companies in a few months time.

  • rate this
    +4

    Comment number 279.

    Every essential industry (energy, transport, infrastructure etc.) should be nationalised or at the very least controlled by a non profit organisation. Leaving these services in private hands merely siphons billions from our economy, either directly through government subsidies or by removing disposable income from consumers. Capitalism has failed to fulfill any of its promisses in these areas!!

  • rate this
    +3

    Comment number 278.

    Shareholders rubbing their hands in glee. The rest of us rubbing our hands to keep warm

  • rate this
    +3

    Comment number 277.

    The energy firms are the biggest rip off merchants going, the banking scandal was bad enough, but isn't it about time these crooks were taken to task? The whole country is suffering because of the recession, yet all we do is continue to line these fat cats pockets. Its about time this government took action and stopped this reckless profiteering

 

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