Protests as two energy suppliers announce price increases – of up to 9% – on same day
Millions of householders face record high heating bills this winter as two of Britain’s biggest energy suppliers announced price increases of up to 9% on the same day.
British Gas has announced a price rise of 6% for gas and electricity customers that will add £80 to the typical household’s annual bill, while npower has announced an 8.8% price increase for gas and 9.1% for electricity, adding a typical £112 to bills.
The rises, which come into effect on 16 November for British Gas and 10 days later for npower customers, will make the latter the most expensive supplier in the country. Customers on its most expensive tariff face a typical annual bill of £1,356.
SSE has already announced price rises of 9%, which take effect on Monday, making it the second most expensive supplier, at £1,354 a year. British Gas is a close third with average bills rising to £1,336.
The move is a bitter blow for householders who suffered gas and electricity price rises in 2011 of 18% and 16% respectively from British Gas and 17% from npower. This was followed by a drop of 5% in electricity tariffs by British Gas in January 2012 and a 3% cut in the same month from npower.
The chancellor, George Osborne, told ITV: “We are doing everything we can to help people insulate their homes better. We’ve got government programmes which we urge people to take up to make sure that they can get their electricity bills cheaper but of course I’m concerned when I see electricity bills going up and partly that is because of things beyond our control – what’s happening in the world with oil prices and gas prices.”
Asked whether energy companies are profiting too much he said: “Of course these companies need to generate money that they can invest in new power stations and new grids and the like but I’m also very clear that at a time like this we’ve got to help families.”
Citizens Advice chief executive Gillian Guy said: “Rises in fuel costs are eating away at people’s earnings, forcing them to make really difficult choices about whether to have a warm home, put food on the table, or fill up the car in order to get to work.”
A total of 8.5m households will be hit by the British Gas increase, though a further 1 million of its customers on fixed-price contracts will be unaffected. The 4,000 British Gas customers on its renewable energy tariff will face even bigger rises when their electricity bills rise by 11%. The company blamed the bigger rise on the higher cost of generating electricity from renewables. Three million npower customers will see their prices go up, while a further 500,000 on fixed tariffs will see no change.
British Gas blamed the price increase on rising wholesale prices as well as increasing costs related to social and environmental issues. “We simply cannot ignore the rising costs that are largely outside our control, but which make up most of the bill,” said the company’s managing director, Phil Bentley.
“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. 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.”
Paul Massara, chief commercial officer at npower, blamed “external factors”. “We support moves to reduce CO2 emissions, but new government schemes will mean energy bills will rise,” he said.
Consumer groups were quick to express their concerns, not only at the size of the rises but at the similarity between the resulting prices. Joe Malinowski, energy analyst at TheEnergyShop.com, said he did not agree wholesale gas prices could be to blame. “Year on year these are down,” he said. “The price rise also makes British Gas’s prices almost identical to that of SSE, once SSE’s prices go up on Monday. So where is the competition in the market?”
Audrey Gallacher, director of energy at Consumer Focus, said: “Two price hikes on the same day will just reinforce the views and prejudices of consumers – whether justified or not – about a lack of transparency and competitiveness in the market.”People are not convinced they are getting a fair deal. Unless they can be reassured about the relationship between costs, prices and profits, consumer distrust will continue, companies won’t get their message across, and the success of the regulator will be questioned.” It is widely anticipated the remaining energy suppliers that make up the “big six” will soon follow suit with similar price rises.
E.ON has a price freeze in place until the end of the yearbut has refused to rule out an increase after that, but ScottishPower and EDF are expected to announce increases imminently.
Some householders could still save close to £300 by switching supplier and tariff, but many of the cheapest deals have recently been pulled. Three of the cheapest five tariffs now come from two of the country’s smallest suppliers, First Utility and Ovo Energy.
• See if you can save money with the Guardian Money Deals switching service
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