Npower must “justify” to its customers why they are introducing one of the largest energy price rises for years, said Energy regulator Ofgem. A former boss of Npower called the price rise “shocking”, and the government also said they were “concerned” by the increase. From 16 March, the company will raise standard tariff electricity and gas prices by 15% and 4.8% respectively. A typical dual fuel annual bill will rise by an average of 9.8%, or £109.The changes would only affect about half of their customers, said Npower. Whereas, 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, which was when some suppliers increased charges by up to 19%. In 2011, some gas prices went up by a similar amount. Uswitch said the rise for dual fuel was the largest for a big six supplier since 2013. Increases in wholesale energy costs and the cost of delivering government policies (such as smart meters and the renewables obligation), are what Npower had blamed their price increase on.
Since last April, the wholesale cost of electricity has risen by 36%. However, by buying energy at forward prices, Ofgem said suppliers could easily avoid consumer prices rises. “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 joined in with the criticism, saying it was “concerned by Npower’s plans to increase prices for customers who are already paying more than they need to.” “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” said the spokesperson for the Business and Energy department. Former Npower boss Paul Massara – who now runs a different energy company – called the rise “shocking” in a tweet.
The announcement for the price rises comes after three other suppliers – British Gas, E.on and SSE – announced that they would be keeping prices on hold until the end of March. EDF had cut its gas prices by 5.2% in January, but they have raised electricity charges by 8.4% since March 1st. Npower said that this 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 Npower’s managing director of domestic markets, Simon Stacey. Although, 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 pay no increase until May.