Increases come in the wake of increases by rivals, and have been described as ‘unwelcome but not unexpected’
Co-operative Energy has announced above-inflation rises in gas and electricity prices of 18% and 11% respectively – just four months after entering the energy market. The firm, which describes itself as the “ethical energy provider” said it had to increase charges, which will affect 14,000 customers, because of price rises in the wholesale energy market.
The increases, described as “unwelcome … but not unexpected” by the consumer group Consumer Focus, will affect households from 3 November 2011.
Co-operative Energy launched in May 2011 promising a simple, single tariff designed to be consistently fair and competitive, and claiming it would challenge the fat profits made by the Big Six energy suppliers by including a twice-yearly profit-sharing deal for all its customers, who will own the business.
At its launch, Co-op Energy’s chief executive, Nigel Mason, said: “Customers have been bamboozled by complicated tariffs and confused by changing prices and unfair contracts, and it has to stop.”
But, announcing its price rise, Mason said: “The last thing we want to do is put up our prices and we have held off for as long as we possibly could, but unfortunately we are affected by the same pressures as the rest of the energy industry.
“Rising wholesale prices during the winter months, rising charges for energy distribution and rising government levies to fund national policies like renewable energy investment, are all factors driving up prices.”
The news from Co-operative Energy comes on the back of rises from all six of the UK’s major energy suppliers, with npower’s 15.7% and 7.2% rise in gas and electricity being implemented on Saturday 1 October. The increases are estimated to have taken the total number of households living in fuel poverty to almost 7 million.
Audrey Gallacher, director of energy at Consumer Focus, said the rises highlighted that people will need to cut costs this winter. She added: “Consumers should shop to find a cheaper tariff and see if there is anything they can do to make their home as energy efficient as possible. Even paying by direct debit rather than cash or cheque could shave much-needed savings off energy bills.” A spokesman added that Co-Operative Energy was “definitely not the cheapest of providers”.
Consumer Focus is calling for the government to reform the energy market and introduce measures including a competition review, with moves to improve bill transparency; a clear strategy to help consumers cut their bills and assist those in fuel poverty; an end to cold-call doorstep energy sales; an end to complex and confusing tariffs; and for the big six suppliers to treat customers fairly.
In mid-September, EDF Energy’s chief executive admitted that the public had lost confidence in the energy industry and said that a Competition Commission inquiry might be needed to clear the air. This was followed by the energy secretary, Chris Huhne, announcing that the government would seek fresh powers to compensate consumers if they were the victims of anti-competitive practices.
Huhne is planning for energy companies to be stripped of their current ability to impede action by the regulator Ofgem by forcing it to seek a second opinion from the Competition Commission. Instead, Ofgem will have powers to impose its decisions and energy companies will have a right of appeal.
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