npower announces fuel price increases
Energy supplier npower has announced increases to its gas, electricity and dual fuel bills, to be introduced from this autumn.
Dual fuel npower customers will have to pay an extra 12.2% for their combined gas and electricity bills from 1 October this year, while electricity customers will see a 7.2% increase to their bills. Gas bills will go up by 15.7%.
npower is the fifth of the big six energy suppliers to up its prices in less than 12 months. Only EDF energy has yet to announce further hikes.
Why the increase?
Richard Lloyd, executive director of Which?, says: "This price hike will make consumers yet again question what's happening in our energy market, especially as npower's parent company has just announced a 130% increase in profits for the first half of 2011. Given such healthy results, people are bound to wonder why their domestic bills have to go up this much."
Chief commercial officer of npower Kevin Miles admits the price hikes "hurt everyone" and says he wishes the energy provider didn't have to push up costs: "Although our half-year profits were better than last year they do not begin to match the billions of pounds we are investing in energy for the future."
He cites the reduced North Sea gas supply, which is forcing UK energy providers to buy energy from pricier global markets as one of the reasons for price increases being passed on to the customer.
"World events have pushed up prices and we believe this trend will continue. In the UK, we have also seen rising distribution and network charges, and further environmental costs," he adds.
Meanwhile, Lloyd at Which? warns that energy company price hikes are also adding further pressure to inflation figures. He says the consumer prices index (CPI), which is currently 4% and already 2% above the Bank of England's target, could rise to 5% as a result.
"The Bank of England has predicted that rising utility bills will drive inflation to 5% by the end of the year, which will put more pressure on already squeezed households.
"It's critical that npower and all suppliers do more to help customers cut their energy bills - whether that's by getting onto the cheapest tariff or making their homes more energy efficient," Lloyd adds.
npower is launching a new fixed deal, which covers customers for the next two winters. New and existing customers that apply for this rate will also receive a one-off £20 fuel bonus, (or £40 for dual fuel customers,) which will be credited to their first bill.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
The Consumer Price Index is the official measure of inflation adopted by the government to set its target. When commentators refer to changes in inflation, they’re actually referring to the CPI. In the June 2010 Budget, Chancellor announced the government’s intention to also use the CPI for the price indexation of benefits, tax credits and public sector pensions from April 2011. (See also Retail Prices Index).