nPower is poised to become the second major UK power company to lift prices on its tracker tariff, stoking fears that further price rises could be on the way from other suppliers in the new year.

The company will announce today that customers who signed up for the plan, which closely follows rises and falls in wholesale energy prices, will face increases of 17 per cent for gas and 13 per cent for electricity, starting on January 1.

nPower’s increases will mean an average £87 more a year on gas bills and £44 more a year on electricity bills for those customers, the company said. Most of nPower’s 6.8 million gas and electricity customers on standard or online tariffs will remain unaffected. The group said that the increases were necessary because since last January, wholesale prices had risen by 34 per cent for gas and 36 per cent for electricity.

Tim Wolfenden, head of home services at uSwitch.com, said that the increase could be a harbinger of further rises in 2008.

“Suppliers are paving the way for across-the-board price increases,” he said, adding: “Today’s move can leave consumers in no doubt that prices are heading North again – the return of the £1,000 average energy bill is imminent. The only question now is which supplier is going to break ranks first and put up prices on standard plans.”

Mr Wolfenden said the size of the increases for customers on tracker plans “may also give an indication of what we can expect when suppliers start to put prices up on their standard plans.

It’s increasingly looking like the smart money should be on a 15 per cent increase, which would mean consumers having to find an extra £137 a year.”

The move by nPower follows last week’s announcement of price rises by British Gas, the UK’s largest energy supplier. It announced increases for its market tracker customers of 13 per cent for gas and 15 per cent for electricity, with immediate effect.

The tracker tariff, launched in January, is reviewed automatically every three months. The costs are calculated using the Heren Energy Index, an independent energy data provider.

The announcement of further energy price rises comes as a fresh blow to consumers already struggling with rising prices for food and petrol, as well as deteriorating conditions in the credit and housing markets.

Power suppliers including EDF and E.On are believed to be considering price rises early in 2008.

Rising wholesale prices have been blamed in part on record oil prices, which are frequently linked to gas prices in bulk supply contracts. Since February, annual forward gas prices for 2008 have risen 42 per cent from 33p a therm to 47p a therm – roughly 10p more than industry forecasts.

Spot prices have risen by 55 per cent over the past year to about 42p a therm from 27p.

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