As we reach the end of October one of the most unpleasant annual landmarks as winter approaches is the traditional hike in energy costs.
The price rises are bad enough but now the government and regulator have waded into the saga this week increasing the confusion for consumers over what the government's energy policy is and what new rules are going to be imposed on energy firms.
In parliament in October, David Cameron, the Prime Minister said that the government will force energy companies to offer the cheapest available tariff to customers. However, Energy Minister, John Hayes, appeared to back down from this position the next day when he was called into parliament to answer an urgent question on the subject. He said the government was only "considering" this option.
Shadow Energy Minister Caroline Flint accused the government of making up energy policy as it goes along and said the current policy was a "shambles".
This year the price rises have come as expected as British Gas has announced six per cent price increases for both gas and electricity for its 12 million UK residential customers. These price changes will take effect from November 16th.
British Gas is not the first of the “big six” utility suppliers to raise costs this year. SSE also announced in August increases of nine per cent to both gas and electricity costs for its customers. These price increases kick in from Monday 15th October.
npower followed British Gas yesterday, announcing price rises of 8.8 per cent for gas and 9.1 per cent for electricity which will apply to most but not all tariffs from Movember 26th.
Scottish Power followed the week after with gas and electricity price rises of close to nine per cent and on Friday 26th Octoner EDF Energy announced it will raise gas and electricity costs by 10.2 per cent from December 7th
In this feature we will look at why prices are rising and then compare the best variable dual fuel energy tariffs available from each of the main suppliers. Next, week we will analyse the best fixed price deals available.
Why the price increases?
There are many possible answers here, some of which could be unprintable for a family website but if we look at the reasons given by the energy customers then the reasons are as follows:-
British Gas announced its latest price increases today with Ian Peters, Managing Director of British Gas Energy saying:
“Britain’s North Sea gas supplies are running out. We now buy gas in a competitive international market. The only way we can buy enough gas is to pay the going market rate, which continues to increase.
“Britain’s national grid requires a major upgrade – energy bills are being used to fund this important investment.
“The costs of government policies that will ensure British households can access affordable, clean energy in the future are rising.
Managing Director of British Gas Phil Bentley, who warned that prices would have to rise earlier this year said: "We know that household budgets are under pressure and this £1.50 per week rise will be unwelcome. However, we simply cannot ignore the rising costs that are largely outside our control, but which make up most of the bill."
However, consumer groups have other opinions on the price increase.
Audrey Gallacher, Director of Energy at Consumer Focus, said: “Wholesale gas prices are volatile and suppliers will look to pass on those commodity costs to their customers.
“But despite many trying, no-one has managed to convince consumers of the necessity for price rises in the context of wholesale prices and company profits.
“It is difficult to achieve, but without a solid foundation to talk about the relationship between costs, prices and profits, consumers will not trust companies, companies will not get their messages across and the regulatory framework will be seen as deficient.”
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "This is a bitter blow for consumers and comes just ahead of winter when the impact on bills will be even more acute. With SSE's price hike coming into effect next Monday and now Britain's biggest supplier announcing a hike of its own, the writing is on the wall for consumers this winter - energy bills are going skywards."
Will others follow?
If previous history is anything to go by, then yes, the others are likely to follow suit. However, E.On has said that it will not raise prices in 2012 and so far, EDF Energy have not announced a price rise as at October 20th 2012.
In August last year, British Gas and Scottish Power started the ball rolling with double digit price rises for both gas and electricity.
They were soon followed, over the next two months by their rival, EDF Energy, Npower, SSE and E.On, though it should be said that the electricity price rises from EDF and Npower were 4.5 per cent and 7.2 per cent respectively.
Scott Byrom, energy expert at MoneySupermarket.com said: "As expected, it was only a matter of time before the Big Six domino effect gained pace, with British Gas becoming the second energy company to increase the cost of bills for its customers - unwelcome news for cash strapped Brits just as we head into the winter months.”
One small consolation is that when British Gas cut electricity prices in January 2012, by five per cent, the other five companies followed suit with similar cuts.
Fix your energy costs?
Analysts are urging consumers to fix their energy tariffs while they can so that they do not see any more price increases for two winters.
This is still possible though some of the best fixed rate deals have been taken off the market recently.
In September, First Utility, Npower and Scottish Power pulled their cheapest fixed rate tariffs from the market.
First Utility’s iSave Fixed v3 plan was the cheapest dual fuel tariff on the market at £1,040 per year and it offered a fixed price guarantee to customers until the end of 2013.
Meanwhile, Scottish Power’s Online Fixed Price Energy January 2014 deal charged an average dual fuel price of £1,052 a year and it came with no exit penalty.
Npower pulled its best fixed price deal, the Energy Blue + Price Promise in September.
This means that the best fixed rate deals now available come from Scottish Power, EDF Energy and First Utility. We will look at these in more detail next week.
Comparison of the best variable rate deals available to new customers
I have used my own annual gas and electricity usage and plugged in the numbers to compare the best energy deals available from all of the main eight suppliers. I did not include Ovo Energy as they do not have a variable rate tariff available to new customers but there fixed rate deal will be covered in next week’s feature.
All of these deals below are based on dual fuel online, paperless billing tariffs to take advantage of any discounts available. The rates vary across each region for each tariff and these are for the south-east.
You can work out your own actual costs based on your own individual usage using this guide. Just plug in the numbers against each tariff and work out what is the best deal for you!
The npower and British Gas tariffs have been updated with the price increases that apply from November.
|Company||tariff||Fuel||Daily standing charge||annual s/c cost £||unit rate(p) inc VAT per KWH||annual usage kwh||annual usage cost £||discounts£||total cost£ inc VAT|
|First Utility||i save v 12 dual fuel||Gas||19.74||72.05||3.648||18611||678.93||n/a|
|First Utility||i save v 12 dual fuel||Electricity||17.85||65.15||10.159||4232||429.93||n/a||1246.06|
|E.On||E.On Energy Discount||Gas||36.624||127.31||3.539||18611||627.19||10.00 of Per year|
|E.On||E.On Energy Discount||Electricity||30.1513||106.07||10.994||4232||443.09||1276.71|
|Npower||Energy Online Jan 2014||Gas||n/a||84.32||3.605||18611||636.50||n/a|
|Npower||Energy Online Nov 2013||Electricity||n/a||116.90||11.088||4232||469.24||n/a||1348.85|
|Scottish Power||variable||Gas||n/a||n/a||7.796 1st 225 kwh per qtr then 3.459||18611||768.97||16.80 per year|
|Scottish Power||variable||Electricity||n/a||n/a||21.621 1st 225 pq then 11.67||4232||590.20||1342.37|
|British Gas||Online variable Nov 2013||Gas||22.972||83.85||4.162||18611||774.59||15.00 per year|
|British Gas||Online variable Nov 2013||Electricity||15.020||54.82||11.917||4232||504.33||1402.59|
|EDF||Standard variable tariff||Gas||26.25||95.81||4.244||18611||789.85||n/a|
|EDF||Standard variable tariff||Electricity||18.90||68.98||14.36||4232||607.71||n/a||1562.35|
|SSE||variable||Gas||16.44||60.06||4.35||18611||809.58||£40 off s/c for dual fuel|