Npower facing backlash over energy price rises

Posted on

Npower facing backlash over energy price rises

Energy regulator Ofgem has said Npower must “justify” to its customers why it is introducing one of the largest energy price rises for years.

The government also said it was “concerned” by the increase, while a former boss of Npower called the rise “shocking”.

The company will raise standard tariff electricity prices by 15% from 16 March, and gas prices by 4.8%.

A typical dual fuel annual bill will rise by an average of 9.8%, or £109.

Npower said the changes would only affect about half of its customers. The other half are on fixed-term deals and will see no price rise.

The rise in electricity prices is thought to be the largest since 2008, when some suppliers increased charges by up to 19%. Some gas prices went up by a similar amount in 2011.

Comparison website Uswitch said the rise for dual fuel was the largest for a big six supplier since 2013.

Justification

Npower blamed increases in wholesale energy costs and the cost of delivering government policies such as smart meters and the renewables obligation.

The wholesale cost of electricity has risen by 36% since last April.

However, Ofgem said suppliers could easily avoid consumer prices rises by buying energy at forward prices.

“We don’t see any case for significant price increases where suppliers have bought energy well in advance. Npower must therefore justify the decision to its customers,” a spokesperson said.

The government too joined in the criticism, saying it was “concerned by Npower’s plans to increase prices for customers who are already paying more than they need to.”

The spokesperson for the Business and Energy department went on: “Suppliers are protected from recent fluctuations in the price of wholesale energy, which they buy up to two years in advance, and prices remain significantly lower than in 2014.”

Former Npower boss Paul Massara – who now runs an alternative energy company – called the rise “shocking” in a tweet.

‘Difficult decision’

The announcement comes after three other suppliers – British Gas, E.on and SSE – announced they would keep prices on hold until the end of March.

EDF cut its gas prices by 5.2% last month, but will raise electricity charges by 8.4% from 1 March.

Npower said it was the first time it had raised prices for three years.

“This is a hugely difficult decision, and we’ve delayed the date this takes effect until after one of the coldest months of the year,” said Simon Stacey, Npower’s managing director of domestic markets.

However, 1.4 million customers on existing standard tariffs will be offered a four-year fixed-price tariff with a 4.8% discount.

Pre-payment customers will not be affected by the increase, and 80,000 people who receive a warm home discount will in effect pay no increase until May.

Read more