Npower has announced that annual energy bills will increase by an average of £64 for over a million people, or 40% of the company’s customers.
The price hike will come into effect on the 17th June, in line with a similar rise in prices from its competitors. Npower’s new rate is slightly lower than expected – British Gas will raise its prices on the 29th May, and Scottish Power on the 1st June, both by 5.5%. Of the ‘Big Six’ energy firms, only SSE is yet to announce a summer rate rise. Npower, British Gas, Scottish Power, and EDF have all announced a rise in standard tariffs, with E.ON slashing discounts (averaging out to a comparable rise of c.£50).
British Gas’ announced price hike was met with predictable resistance, Ofgem labelled it “unwelcome” and Energy Minister Claire Perry said: “We are disappointed by British Gas’s announcement of an unjustified price rise in its default tariff when customers are already paying more than they need to.”
On the Npower announcement, she said: “Consumers should vote with their feet. Switching suppliers will always help consumers get the best deal.”
The new rate is calculated by combining a rise of 4.4% in gas prices and 6.2% for electricity, leaving the average customers on standard variable tariffs with a ‘dual fuel’ (combined gas and electricity) bill of £1,230. These rate hikes would not affect fixed rate deals, prepaid meter bills, or customers who had purchased Safeguard tariffs that guarantee no rise in bills.
Simon Stacey, Npower’s managing director for domestic markets, said: “Announcing this price change today isn’t a decision we’ve taken lightly.” He blamed rising costs for the company, mostly regarding wholesale supply, the costs for which have “unfortunately been on the rise for some time and we need to reflect these in our prices.”
The rising wholesale costs have been felt nationwide by a number of companies, with costs currently 13% higher than they were in February. They are expected to continue to rise over the course of the summer, raising the spectre of continued increases for customers in return.
The move has been greeted with dismay by analysts who have pointed out the looming tariff cap deadline, which would force energy companies to freeze their prices for up to years at a time, calculated to save customers up to £100 a year. Prime Minister Theresa May said: “It’s often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways. Our energy price cap will cut bills for millions of families. This is another step we are taking to help people make ends meet as we build a country that works for everyone.”
Npower is facing other issues – their proposed merger with SSE is under investigation by the Competition and Markets Authority over concerns over potential monopolisation and lack of competition.
