Npower announces prices hikes in energy billsGas and electricity costs to rise

05 January 2008

Gas hob

One of Britain's biggest power companies has announced price hikes of 17.2% for gas and 12.7% for electricity in a move set to hit more than four million households.

Npower said customers will see annual bills jump on average by £95 for gas and £64 for electricity under the price changes, due to come into effect today.

The price rises will push Npower's average dual gas and electricity bills to more than £1,000.

Experts today predicted that other energy suppliers will follow suit soon with prices rises of their own.

Wholesale prices

Npower - the UK's fourth biggest energy supplier - blamed the decision to up prices on steep rises in wholesale gas and electricity costs, which it claimed have risen by more than 60% since the middle of last February.

It added that gas distribution costs had also contributed to price pressures and announced its gas prices will vary regionally for the first time to reflect gas transportation costs.

That means gas price rises vary from 15% to almost 24% for some Npower customers.

London and the East Midlands will be hit with the highest increases, with some single fuel customers suffering a 23.8% rise.

Parts of Wales and Scotland will see their bills upped the least.

Regional tariffs

Npower said competitors Scottish Power and Scottish and Southern have already introduced regional gas prices, while British Gas announced last year that it was set to switch to the new tariff structure soon.

Electricity prices already vary across the regions and Npower said prices will rise from 8.7% in areas in Wales and Scotland, up to 27% for some customers in the East Midlands.

Giuseppe Di Vita, managing director of Npower's residential business, said: 'This decision was not an easy one. We always try to protect our customers for as long as possible, but sadly higher energy prices are a fact of life.

'Npower is not alone in facing these higher costs, and we expect other suppliers to follow suit very shortly. Anyone struggling to pay their bills, regardless of the time of year, should get in touch immediately.'

Npower, which is owned by German company RWE, has already increased its online tariff for new customers, upping bills by 17% the week before Christmas.

Centrica

British Gas parent Centrica also last month announced increases to its market tracker price, increasing bills by 13% for gas and 15% for electricity.

It also warned less than two weeks later that wholesale prices left the energy industry facing a 'difficult environment' in 2008, signalling that prices were set to rise across the board.

When asked about the prospect of price rises, the UK's other main energy suppliers gave no indications.

A spokesman for British Gas, which has 16 million gas and electricity customers, said: 'We are just looking at the market and seeing what happens.'

EDF, which has 5.5 million account holders, said its prices were continually under review.

Constant monitoring

Scottish and Southern Energy, which has 8.5 million customers across its Southern Electric, Swalec, Scottish Hydro Electric and Atlantic Electric and Gas businesses, gave no indication about its intentions.

A spokeswoman said: 'We have established a strong track record for taking a responsible approach to pricing and we will continue to do this throughout 2008.'

E.ON said it was 'constantly monitoring' prices for its eight million UK customers, likewise for Scottish Power, which has 5.2 million account holders.

A spokesman for Scottish Power added that the firm was 'looking at our position in a very competitive market place'.

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