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
    +4

    Comment number 336.

    All that QE funny money is going to people with big asset base and all the others have to pay through the nose for the generated inflation!
    This manipulation of capitalism must end.

  • rate this
    +7

    Comment number 335.

    I wonder how many ex polititians have places on the boards of these companies and if any new vacancies will appear at the end of our current polititians careers.
    Our top polititians are bought and paid for.
    Serving our country should be the top accolade we could give someone, wether their in our armed forces , looking after the ill or running our country. Instead they are in it for themselves.

  • rate this
    +4

    Comment number 334.

    People expecting anything different?
    It's coming up to winter so the rip off merchants will put their prices up - by a lot, JUST LIKE how in the middle of summer they put the prices down a little.
    Sooner or later the people need to find some way of showing the power of the customer/masses in all aspects in the UK (peacefully and legally)

  • rate this
    +3

    Comment number 333.

    Wow, the 'progressive' lefty rubbish is getting out of hand on this story.

    Bills are going up because the Govt (from the EU) are mandating lots of money spent on green windmills (which are NOT green) which cost a loads, are ugly and are useless (need gas/oil power station as backup when wind not blowing at correct speed).

    But hey, sod the facts, blame capitalism, the driver of progress.

  • rate this
    -1

    Comment number 332.

    320. joeordinary

    Amazing how you completely airbrush out 12 years of Labour rule.

    In fact Labour made it far worse by stuffing £100's onto our bills to pay for expensive "green" fuel that doesn't work.

    Another mess to clear up.

  • rate this
    +2

    Comment number 331.

    Does privatisation still seem such a great idea.... we no longer control our own energy prices...

  • rate this
    +3

    Comment number 330.

    Of course they've jumped and raised their prices! All they have to do is do it, ride it out for a day or two and then watch the money roll in. The Government are utterly feckless and we are basically helpless. This is what happens when public services need to turn a profit, oh and we're getting more and more of those thanks to this government.

  • rate this
    +5

    Comment number 329.

    Haven't seen this much blatent robbery since Dick Turpin. The Energy companies are that highway men. We're being held up by their gun and shaken up and down for every penny we earn. Yet when the energy prices come down the prices for us never do. It ludicrous it really is....

  • rate this
    +2

    Comment number 328.

    268. Paul
    ' And your German wife thinks the *UK* government is doing things wrong?'
    If the working man in Blighty got an average German wage he would pay 22p/kWh for leccy or 5p for his gas he could afford it.
    Menial jobs are scraping the national minimum which is ludicrously low to start with.
    Standard of living in Blighty is nothing to be proud of!
    Unless you are a banker or energy exec!

  • rate this
    +6

    Comment number 327.

    Aggressive capitalism leads to a greed driven, profit obsessed society.If you want to bring down BG prices, stop buying from BG.Other energy companies will soon fall into line with the drop in BG prices. Same with petrol.Boycott one company and its prices will fall, followed by the prices of other companies.Let cartels like the energy companies go on colluding to screw you and they will do so.

  • rate this
    +6

    Comment number 326.

    304.Frances
    13 Minutes ago
    Solar,solar,solar,solar,solar.

    ------

    Are you that git who keeps cold calling me?

    If so please stop.

  • rate this
    0

    Comment number 325.

    Glad I signed up to a fixed term with OVO Energy just a few days ago and moving away from Npower, seems like I got my timing perfect this year.

  • rate this
    +7

    Comment number 324.

    THIS IS ENERGY TERRORISM.

  • rate this
    +8

    Comment number 323.

    @256 I suspect your comments are getting negative ratings because you made sweeping and rather offensive generalizations.

    For the record: I am not on benefits. When I was unemployed, I refused to claim benefits. However, I don't begrudge the fact that others do, or that my taxes are used for that. Adjust your world view

  • rate this
    0

    Comment number 322.

    @304. Solar,solar,solar,solar,solar.

    You have a flare for this........ :-)

  • rate this
    +5

    Comment number 321.

    Nothing to worry about in 3 years time as we now all know (many people already suspected that earlier) the lights go out in this country anyway. All the previous governments have been more interested in keeping the property bubble up instead of investing in energy infrastructure decreasing the energy density even further. Who has not left in three years is his own fault you have been warned!

  • rate this
    +6

    Comment number 320.

    If you see Fred, tell him.. that exactly what Thatcher and the Tories always wanted has happened. We are now totally under the control of the 'shareholders' as to how much we pay for basics like water and fuel. Privatisation was supposed to increase competition and drive prices down...how stupid are people who beileved that? I am 49 and I don't see any change in my lifetime if I get to 70.

  • rate this
    -6

    Comment number 319.

    THE SOONER THE BETTER WE ARE ABLE TO POWER UP OUR HOMES FROM SOLAR AND OTHER RENEWABLES THE BETTER,BETTER STILL IF THEY ROOF MOUNTED.COUPLED TO AN OVERNIGHT STORAGE UNIT ,COMPREESSED AIR, AND GOT THE OLD FOSSIL FUEL YOKE OF OUR NECKS,REINDUSTRILISE AND INSTALLATION WILL GO ALONG WAY TO IMPROVE EVERYTHING

  • rate this
    +6

    Comment number 318.

    256.bagwag
    12 Minutes ago
    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.
    ///
    So only people that claim benefits are labour supporters? You are so narrow minded and you have the vote! Also, that is an old mantra - the world runs on technology. We need the internet to find work - doh!!

  • rate this
    +5

    Comment number 317.

    "IT was the best of times it was the worst of times it was the age of wisdom, it was the age of foolishness, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way". C Dickens a tale of two cities.

 

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