Npower and British Gas raise energy prices

 

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

Related Stories

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%

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    0

    Comment number 836.

    @176 ... Buy a wood burning stove? Have you seen the price of those things and what of people living in 'smoke free' zones? Time to take off those rose tinted glasses and enter the world of monopolies, under investment, squandered natural resources and a woefully inadequate national 'power framework'.

  • rate this
    0

    Comment number 835.

    Maybe if the Bank of England stopped printing money (one effect of which is to bolster asset prices) gas and electricity wouldn't be so expensive.

  • rate this
    +1

    Comment number 834.

    British gas makes massive profit increases and passes not one penny on to consumers, what's the betting the shareholders get it. Oh and of course the directors.

    These power companies are an utter disgrace, they do this year in year out using exactly the same excuses, and the soppy british consumers just take it.
    One day they'll get their just deserts, but I bet I'm not alive to see it.

  • rate this
    0

    Comment number 833.

    Why only in winter when people use it most wholesale prices and govt policies prevail all year ,its a combined act of making money by all energy companies,these companies profits always rise after winter quarter due to price rise

  • rate this
    0

    Comment number 832.

    People waste resources, then moan about the cost. For eg, I feel a bit nippy at the moment. The heating is not on, but equally I'm not wearing a fleece or a jumper when I should be. And I did get off my backside and change energy companies (when warned to) 1 month ago. As a result I have a good deal (no longer available) which is fixed until April 2014 (with prices lower than I was paying before!)

  • rate this
    +3

    Comment number 831.

    In 1980s, privatisation gave us a good cheap 'deal' on the basis of controlling union power.

    Then the big companies carefully worked to ensure their monopoly for 30 years without investing.

    Now that their 'cartel' is established, they do what they want.

    Sound familar ? Energy companies, banks, supermarkets ....

    Sometimes it's better to pay a bit more to the small people.
    Too late now.

  • rate this
    +1

    Comment number 830.

    Sleeping bag times are almost upon us,I hope its not a bad winter then...
    People do live like that in winter.Them win win us lose lose.Same old outcome.Robbed...

  • rate this
    -2

    Comment number 829.

    The public versus private debate is just a minor distraction in the overall scheme of things and is solely based on political ideology.

    Whether you think the consumer should pay (private) or the taxpayer (public) the unpalatable truth is that natural energy resources are finite and the cost of providing them are guaranteed to increase over time.

  • rate this
    0

    Comment number 828.

    Rip off & doing it right now is devastating news for everyone. They spring it on you right now winter is coming. Like they did last year!
    I will get my warm sock and slippers and comphy blanket and to hell with heating I will get a hot water bottle. I have no choice. We all going to suffer. I tried to change my suppliers but I was refused. So I'm stuck with ---.

  • rate this
    +1

    Comment number 827.

    People want their own homes, 2.5 kids, 2 Cars, foreign holidays,SAT TV, Cable, Big TV's, XBox's, Computers, Laptops, Smartphones, etc.. etc..
    So big business brought you it all, and available on the never.. never..

    Just like the country to much expenditure,
    To little income to pay the bills!

    Now where are your priorities?, Tough choices to make?
    Cut something to pay for Gas/Electricity?

  • rate this
    0

    Comment number 826.

    Following on from 821.
    Thats the reason we will never get a vote on the EU because of all the land subsidies paid the big estate owners.
    They dont want to loose it.
    Last Govt also passed an act of parliment agaist Climate change.
    Must think they were King Canute
    And we pay & pay & pay
    Blunder of the century
    Time for another U turn

  • rate this
    0

    Comment number 825.

    305.peggy
    downsize, I did and my fuel bills are £45 per month in total and in the winter I have the heating on 24/7 small is beautiful when paying the bill and I keep my home at 74F

  • rate this
    0

    Comment number 824.

    So its a combination of energy companies greed for even more profit during economic difficulty, and the government putting development of cleaner energy onto the general public with a stealth tax.

    A responsible government would ban energy increases at this time, close all tax loopholes for the richest (then there would be plenty for clean energy) and raise winter fuel allowance for the elderly

  • rate this
    +1

    Comment number 823.

    .

    OK This is what happens when you print money

    ....................DEVALUATION = PRICE INCREASES .......................

  • rate this
    +2

    Comment number 822.

    Many bloggers here miss the point.
    This is a direct result of Parliamentary energy policy signed off by David Miliband during the last Government and endorsed by David Cameron.
    If you want renewable energy as policy, then your bills will DOUBLE again by 2020.
    Norway would love to sell us more gas but they can't because of Government energy policy so prices go up!

  • rate this
    +3

    Comment number 821.

    Was on the TV that the Govt gets the thick end of 25%
    They are not letting go of that are they !
    Big companies & govt are ALL in it together playing along like a pantomine act & we the public have to pay a high price for the seats
    The cost of wind turbines etc is extortionate
    http://www.guardian.co.uk/environment/2012/feb/28/windfarms-risk-free-millions-for-landowners

  • rate this
    +3

    Comment number 820.

    why are people so surprised this is happening...?
    we have allowed the governments to sell the everything down to the kitchen sink to the private sector, and now we are paying the costs.
    ITS TIME FOR THE PEOPLE TO STAND UP AND STOP BEING SHEEP !!

  • rate this
    +3

    Comment number 819.

    802.J Workerbee
    34 Minutes ago
    Wonder if Mr Cameron's kids will wake up to a freezing cold house this winter ?
    =====
    No, they will be nice and warm in the pub.
    ~~~~~~~~~
    800.creepy2
    35 Minutes ago
    wake up people the elite need to kill us off they will do what ever it takes
    ====
    Why?, don't be silly, they need us for fodder and money.!

  • rate this
    -1

    Comment number 818.

    Energy will continue to get more expensive as global demand rises and the UK falls further back in the pecking order. Had we invested properly in nuclear years ago we wouldn't be in so bad a fix now. But no, we listened to all that guff about renewables, which cannot produce a fraction of our energy needs. Its self inflicted. Tough.

  • rate this
    +1

    Comment number 817.

    Bristish Gas is always the first to raise prices. The great Con master always lead. See the others follow soon. It's all a game. They make you feel that it is justifiable to raise prices. Is it not the reasons why our Nation is spending our Tax money in fighting wars and occupying other countries and enslaving them? so we can have cheap commodities like fuel and Gas? We are conned both ways.

 

Page 1 of 42

 

More Business stories

RSS

Features

  • Krak des ChevaliersSitting targets

    How ancient treasures in Syria are being bombed to pieces


  • Mesut Ozil's tattoo reads "Only God can judge me"Ink explained

    Nine World Cup players' tattoos decoded, and one who refuses


  • Google sweetsName game

    Would Google have made it as BackRub?


  • Putting a coin in supermarket trolleyMinor annoyance

    Why are Morrisons getting rid of coin-locks on trolleys?


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.