Energy bills to rise again

21 August 2008

E.ON and Scottish and Southern Energy (SSE) have today both announced price rises for gas and electricity customers, the second rises from both firms this year.

Four of the six big energy firms have now confirmed a second wave of price hikes, with British Gas and EDF Energy already having taken action.

E.ON, the German-owned company formerly known as Powergen, says around four million customers will be hit by the price hike, with gas customers paying 26% more and electricity customers 16% more. Dual fuel households will see a 22% rise, equal to 62p a day.

The increase comes into effect on 22 August. E.ON last put up prices in February. According to, the average household bill for a dual fuel E.ON customer was £913 on 1 January 2008, increasing to £1,063 in July. Following the latest price hike, it will rise to £1,297 an increase of 42% or £384 since the beginning of the year.

SSE's increase, which comes into force on 25 August, will seeelectricity customers' bills increase by around 19.2% while gascustomers face a hike of 29.2%.On a more positive note, the firm has promised not to increase prices again in 2008. Whether or not prices will shoot up at the start of 2009, however, remains to be seen.

E.ON says the move is a direct result of rising wholesale costs, which it claims have increased by over 51% since February. Graham Bartlett, managing director of E.ON's retail business, says: "I'm very aware of the effect that today's announcement will have on our customers and I recognise that this is a very tough time for everyone."

Alistair Phillips-Davies, director of energy supply at SSE, says thecurrent energy shock has not been seen since the 1970s, and is likelyto have "more profound and lasting consequences".

"The country now relies on energy imports and the prices we all pay forelectricity and gas are ultimately determined by the law of supply anddemand in a global economy," he adds. "People are naturally veryconcerned about the many financial pressures they are now facing, butwhen it comes to electricity and gas there is always help available,from free energy efficiency measures to tariff choices and tailor-madepayment plans."

Future for energy prices

The day before E.ON made its announcement, the news broke that a Norwegian gas pipe had been closed after a leak was detected. The closure will put further pressure on gas prices, and has prompted a warning that British households now face paying even more of their income on energy bills. The closure prompted prices for wholesale gas to increase by over 10%.

Ann Robinson, director of consumer policy at, says: "Soaring energy bills pose a huge threat to our standard of living - gas and electricity are essential commodities which have now become a luxury that many can no longer afford.

"The biggest question now is what is going to happen to household energy bills in the future. Unfortunately, all the evidence points towards a painstakingly slow process and a steady climb upwards for energy bills - this will be cold comfort to households this winter."

And Robinson also warns that higher gas bills are not just a short-term problem. With around one third of British power stations needing to be replaced by 2020, at a cost of about £100 billion, plus greater environmental levies on energy suppliers, customers will end up footing the bills - literally.

"It looks like high energy prices are here to stay," she adds.

So what, if anything, can consumers do to lessen the blow? Unsurprisingly, experts suggest households think about switching to a fixed or capped deal now to keep their costs down for as long as possible. At any rate, using a utility price comparison website to see what deals are out there is well worth it, as you may find you could save money elsewhere.

Robinson also recommends consumers consider moving onto an online plan, as these tend to offer better prices. And paying your bill by direct debit is another easy way to reduce the cost of gas and electricity.

If you are fuel poor - meaning you spend more than 10% of your income on energy - or are simply struggling to afford to heat your home, then it is worth contacting your energy supplier to see how they might be able to help you. Most suppliers have increased the financial aid available to vulnerable customers, and you could benefit.

At the same time, people are being urged to cut back on the energy they use. Making sure you switch off lights when you leave a room, turning down the thermostat or simply wearing a thicker jumper during the cold months isn't just environmentally friendly - it's also friendly for your wallet.

The Moneywise guide to beating rising energy bills

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