Npower hikes prices by 50% more than British Gas

Npower is the latest of the “big six” energy providers to announce price increases for both gas and electricity.

Npower is increasing the cost of gas by 8.8 per cent and raising electricity prices by 9.1 per cent from Monday 26th November. The price increase are 50 per cent more than British Gas, though npower says that it is starting from a lower cost and that its dual fuel prices are still cheaper than British Gas's in most cases.

The new prices will increase the annual cost of a household's dual fuel bill by £108, taking the cost to £1,258 if you pay by direct debit.

The move follows yesterday’s announcement of price rises of six per cent for both gas and electricity by British Gas which will take effect from November 16th.

Npower says that the reson for its price increases being 50 per cent higher than those announced by British Gas is: "Our prices are starting from a lower point than those of British Gas. We are waiting for the full detail of the British Gas price increase Initial calculations show that we will still be cheaper than British Gas for Monthly Direct Debit Dual fuel based on national average price and notional consumption of 16.500 kWhs gas and 3,300 kWhs electricity."

SSE announced its own price increases in August of nine per cent for both gas and electricity which apply from Monday 15th October.

The Chancellor, George Osborne said: "I think energy companies should make sure they’re only adding to their bills the absolute minimum they need to add to continue investing in our energy supply and they’re not going beyond that."

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "With SSE's hike coming into effect on Monday and both British Gas and npower announcing today, consumers are heading into a winter of discontent. The upshot of this triple whammy is that we can expect to be paying a record amount for our energy"

E.On are the only one of the “big six” suppliers to promise not to raise prices before the end of 2012.

Paul Massara, chief commercial officer at npower said: “There is never a good time to increase energy bills, particularly when so many people are working hard to make ends meet. But the costs of new statutory schemes, increases in distribution charges and the price of gas for the coming winter are all being driven up by external factors, for example government policy.”

Audrey Gallacher, Director of energy at Consumer Focus, believes the timing of the increase shows how the market works. She 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.

"Consumers need to see the Government and regulator taking big steps to help mitigate the rising cost of energy for customers."

The move is a further blow for households across the UK as the average dual fuel annual energy bill is now more than £1,300.

Analysts are advising customers to take advantage of the top fixed rate energy deals available from Scottish Power, First Utility and EDF Energy to protect themselves against future price rises for two winters.

Mr Massara added: “Although we have managed to smooth out the worst fluctuations and protect our customers for as long as we can, we are now having to pass on some of these costs.”

He added: "We support moves to reduce CO2 emissions but new government schemes will mean that energy bills will rise."

Ann Robinson believes that many thousands of households could buckle under the financial pressure this winter.

"Last winter over eight in ten households were rationing their energy over fear of the cost. And now the pressure of an extra £100 or so on energy bills will leave many more buckling. As we head into another winter, the potential impact on health and well-being is immense," she said.

Friends of the Earth's Senior Energy Campaigner Paul Steedman said that the UK needs to break its reliance on fossil fuels and use less gas in order to reduce the future costs for millions of households.

He said: "Soaring gas prices are the main reason why fuel bills have rocketed in recent years.

"Unless our failing energy system is urgently overhauled, cash-strapped households will continue to pay a hefty price for our fossil fuel dependency.

"Ministers must abandon their plans for a reckless dash for gas, take rapid steps to make our homes and businesses more energy efficient."

Read more: The cheapest variable rate energy deals for winter 2012