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
    0

    Comment number 356.

    @333 Fred Bloggs

    How do you explain that massive increase in profits then?

  • rate this
    +2

    Comment number 355.

    GREED!

  • rate this
    +3

    Comment number 354.

    And how many of these companies are foreign owned due to the EU dictats.

    I would be pleased if all the foreign ripoff companies were taxed on their UK ernings at 100% until the debt is paid off.

  • rate this
    +2

    Comment number 353.

    You know, the saddest part about all of this, is the fact all we can do is moan about it.. they have us all stuffed.

    perhaps thats why they let us have the HYS boards so we can do what we as a nation do best, and that is moan moan

  • rate this
    -3

    Comment number 352.

    @328. strangebrew

    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!

    --

    Nothing stopping you moving to Germany...

  • rate this
    +10

    Comment number 351.

    Brilliant well done Maggie for privatising all the essentials in our lives. I cannot comprehend ordinary working people who thought she was good for this country. Like Turkeys voting for Christmas.

  • rate this
    -4

    Comment number 350.

    I think people have to wake up to the fact that oil and gas are beginning to run out. Energy prices are going only one way long term. Its no good blaming the energy companies, its consumers buying Chinese and Indian goods that have created fuel demand in those countries that is pushing up world prices. Hedge you fuel prices, buy shares in BG!

  • rate this
    +5

    Comment number 349.

    one word....disgraceful!

  • rate this
    +16

    Comment number 348.

    Global oil and gas prices are going down; we are getting an increasing proportion of our energy from renewables and the govt is forcing through waste to energy plants.

    So why the price hike?

  • rate this
    +6

    Comment number 347.

    Unbelievable. I already help my parents out with the energy bills so they can keep themselves warm. Now another increase looks like im going without heating this winter or stop helping my parents keep warm. What a joke. Energy companies you should be ashamed of yourselves. The whole country is suffering but you still need t make sure your highly in profit 345 million

  • rate this
    +17

    Comment number 346.

    Lower North Sea oil production is one reason for Britain's weak economic recovery and makes it harder for Osborne to balance the books. Even more worryingly acute energy dependency looms. The coal mines have closed; nuclear power stations are on their last legs, oil from the North Sea will soon be a mere dribble. An entire era can be summed up in three words: discovered, extracted, squandered.

  • rate this
    +3

    Comment number 345.

    All people have to do is go on the likes of uswitch and put in how much you spend on fuel, they will come back with better options from smaller companies and then you tell these thieves to jog on, my bill has come down by £350 since I moved away from British Gas

  • rate this
    +20

    Comment number 344.

    This is the problem when you have so few energy companies to choose from. Even without talking to each other, they can fix prices the way they want rather than be competitive to gain your custom. It's like there should only be one company for all the way they behave.

    This is the government's and weak regulator's fault for not being proactive to stop this abuse on peoples stretched incomes.

  • rate this
    +12

    Comment number 343.

    I have done almost everything in the name of energy efficiency.Have new built house,more than 320mm of loft insulation, draft proofing, closed windows,thickest curtains, 8W bulbs everywhere. Use timers on sky box,slave sockets for almost everything, dry clothes outside, wear thickest of wool clothes, shower for less than 2 minutes, still bill is going up. Can BG boss explain what next I should do?

  • rate this
    +8

    Comment number 342.

    Want to solve the energy price issue? UK MUST be energy self sufficient. You need the government to stop lying about inflation and stop changing the way that they measure it to make it smaller. Inflation is 8-15% depending on your circumstances and everyone outside the government knows it.

    The economic collapse was an inside job, and we're all merrily playing along the ruling elites' game.

  • rate this
    +6

    Comment number 341.

    Perhaps they are in cahoots with the government for additional VAT as a way of claiming back the winter fuel allowance for the elderly?

  • rate this
    +7

    Comment number 340.

    No doubt we'll soon have boz-eyed Bertie interviewing the CEO's on some specious 'Business' programme yet again,complete with mugs of coffee,and then spinning to us what a great deal we're all getting.

  • rate this
    +1

    Comment number 339.

    303 bagwag
    'the land load my help'-words fail me bnut unfortunately not you!

  • rate this
    +22

    Comment number 338.

    If only 1 pensioner dies this winter out of fear of putting their heating on, that would make these greedy scum murderers in my book.

  • rate this
    +12

    Comment number 337.

    All the money that should have been invested into energy infrastructure over the past 20 years has been spent by private companies each spending on their separate billing and marketing systems.

    And, of course, the pay/bonuses of their 'fantastic' management teams.

    Now we reap the real benefits. These core essentials should never have been privatised.

 

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