Robin Pagnamenta
We've made some changes
to The Sunday Times
Npower, Britain’s fourth-largest power supplier, was criticised yesterday after raising customer bills by 17 per cent for gas and 13 per cent for electricity.
Andrew Horstead, head of energy research at the consultancy Utilyx, acknowledged that suppliers were facing growing cost pressures, but said that npower was using record oil prices as a “smokescreen” to restore profit margins. He said that the link between gas and oil prices was nebulous and indirect.
Npower’s announcement is expected to open the floodgates for further price rises from rival power companies such as EDF and E.ON, which owns Powergen. Centrica, the owner of British Gas and the UK’s biggest supplier, is expected to unveil its own price increases next week.
Npower said that it had been forced to lift the cost of average household bills for dual-fuel npower customers from £908 to £1,047 because the cost of buying energy on the wholesale markets had “increased dramatically”.
“Since mid-February 2007, electricity wholesale costs for 2008 have increased by 66 per cent and gas by 60 per cent,” a statement said. The company also blamed increased distribution and transmission costs.
Figures from Utilyx show that spot gas prices in Britain remain significantly lower than in the winter of 2005-06. Average spot gas prices in Britain were 53p per therm yesterday, 21 per cent lower than two years ago, when a supply squeeze and severe weather triggered a rise to an average of 64p per therm and briefly to highs of nearly 200p per therm.
The increase to npower’s standard tariff is effective immediately and will affect more than two thirds of its 6.8 million customers. Average bills will be £92 higher for gas and £48 for electricity.
Npower said that, because of regional price differences to reflect distribution costs, the maximum price rise for gas would be 23.8 per cent and the maximum increase for electricity would be 27.1 per cent.
Tim Wolfenden, of uSwitch.com, said that there were still “lots of questions” about the motivation for npower’s price increases. It was impossible to say whether npower’s price rises were justified because its statement contained no detailed explanation of its rationale.

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N Power are no different to British Gas. Britgas announced 15% increase in electricity prices, which like N Power is deceiptful. I am on Economy 7 (electric only house ) and the increases are Tier 1 (44.7%) Tier 2 (7%) Night Rate (93%).
The overall effect when applied to my estimated usage is 36.3% adding nearly £450 to my costs.
I will wait until April (when all the others have put thier prices up) and move my account. I wrote to British Gas Managing Director (Phil Bentley) and received a letter back from one of his staff. She said that having halved the application of Tier 1 rates this equated to a 15% increase. She was startled when I told her that the night rate had increased by 93% ( She didn't know that!) . Later she said that British Gas had been making a loss on the Economy 7 Night rate and had to adjust it - hence the increase. It is a case of pay up or go elsewhere.
British Gas obviously do not like Economy 7 customers and this is their way of getting rid of them !
Peter Edington,, Winton, Cumbria, UK
time to move to another supplier, again ... today
Alex, London,
It's a shame and disgrace that companies like Npower don't even advise their customers of price changes until 4 weeks after the event. We read about it in the press but then tolerate major delays in the "Dear John" letter. After phoning Npower to enquire why their first words were "we have heard today that other companies are following with increases". Their strategy is obviously to delay until other companies announce in case they loose custom to apparently cheaper suppliers. A clear example of the customers being the underdog to profit aspirations.
Nigel, Guildford, Surrey
The purported 13 per cent nPower electricity price rise should be taken with a pinch of salt. I have called nPower twice (the second time for confirmation) today in order to find the new tariffs. Based on the figures given (twice!), my electricity bill will rise by 40 per cent. I'm switching today!!
Paul Turner, Corsham, Wiltshire
Maybe now is the time for every customer of NPower to switch supplier, if NPower go out of business over night, then maybe the other suppliers will think twice.
Robert Knowles, Preston, UK
How many layers of management are the consumers subsidising with a price hike of 17%? How does the price proposed compare with the charged in Germany?
David , Chorley, UK
If there is one thing that will cause severe unrest in this Country is when Russia decides to cut off the gas supply that, in maybe 2 decades time or less, they will monopolise and then we should really worry. Again I say that we need to renationalise all the essentials such as Energy, Transport, Health and Education so that we do not have to rely on what private companies do. As for present price increases, I hope that the Government realises that if these increases go the same way as the fuel prices then they will will have riots on their hands.
John, Woking, Surrey
This latest increase in one of the necessities of life exposes New Labour's deciet over inflation figures. Sure, white goods are going down, but they are usually one-off purchases, not regular outgoings. Looking at gas, electicity, petrol, food, rail fares, bus fares, council tax and so on, the real rate of inflation has been in double digits for ages. When will the British people wake up to the dishonesty of its governing class?
Bruce Burniston, Swansea, UK
As electricity is distributed via a national grid how can distribution costs vary? With regard to national variations in gas distribution prices, why am I living in N.E. Lincs so not far from Easington where gas is piped from Norway, to be subjected in an extra swingeing increase. None of this is justified by Npower and as Daren in Redcar says this is just an excuse to increase profits probably affected by them asking us to be efficient and use less fuel!!
Carol Dunn, Grimsby, England
I've worked in the oil and gas industry for many years now and I know the price of oil and gas on the market at any one time. 53p/therm is very very reasonable price for this time of year bearing in mind the recent cold snap,and is likely to drop again in the coming months to its usual 24p or thereabouts. We have the north sea interconnector pipelines now which has steadied the overall gas price throughout the year. In real terms the cost to the average householder is far more than the 17% rise due to what the average householder is likely to get in their "cost of living" pay rise. The energy companies really are taking a liberty with us the consumer, we need to take a stand as we did when the petrol prices were over-inflated a few years ago.
Daren, Redcar,
Surely this market is a prime example of a cartel - look how every energy company suddenly finds a reason to raise prices within days of each others. This Government needs to get their heads out of the sand and stop listening to big business alone - look at Kenya and heed the lessons or face the consquences.
Jack, London,
INFLATION? - 17% Gas 13% Electric increases.
Chinese video recorder £29.99 - 40% decrease.
All into the magical RPI shopping basket - 2.1% INFLATION?
Ben, Preston, UK