Npower and British Gas raise energy prices
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.
“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” and warned that the rising cost of government energy policies was likely to add even more to household bills next year.
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.
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 opacity and 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.
“Everybody knows that this is a market that is not competitive, not properly working for consumers.There is very little pressure on British gas to be efficient and to keep these price rises to a minimum.”
Over six million households in England already plan to cut back on their heating this winter because they are worried about affording their bills, according to Audrey Gallagher of the government-sponsored watchdog Consumer Focus.
“Today’s price rise will leave customers even more worried about the cost of heating their homes,” she said.
British Gas last raised its tariffs in August 2011, when gas prices went up by 18% and electricity prices by 16%.
Then in January 2012, it cut its electricity prices by 5%.
The British Gas boss claimed that 85% of the price it charges customers is outside its control, including wholesale gas prices and the cost of government policies to try to reduce emissions and help the poorest households.
“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.”
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.
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.”