The announced increase from Npower will see dual fuel bills increase by 10.4%. This is currently the highest increase so far with other members of the big six sure to follow in the coming days. British Gas has already announced an increase next month of 9.2% with SSE following at 8.2%. 3.1 million customers will be hit badly by Npower’s price increase, customers using gas suffering the worst blow with a staggering 11.1% hike. It’s thought that the average household will pay an additional average of £140 per year pushing the average annual dual fuel cost to nearly £1.5k.
It goes without saying that this news has been met with a frosty reception from millions of customers. Last year, the big six energy companies announced that there would be rises within the regions of 6% - 8%, but recent figures have exceeded those expected and angered the public, lending more appeal Ed Miliband’s price fixing proposals and giving Labour a much needed boost. Chief executive of Npower, Paul Massara, said,
“I know that any increases to household bills are always unwelcome, and this is not a decision that we have taken lightly. We will continue to take steps where we can to reduce the impact of the external influences on energy bills”
It seems the big six are pinning their price increases on trying to keep up with government energy schemes and targets in the coming years and sourcing the raw materials required to do so. This isn’t convincing many people and isn’t garnering much public support and it seems the big six are going to have to work a little harder to win over their customers.
Npower has been the first company to openly outline its plans for profit, claiming that it is seeking a 5p return for every pound which it guards as a ‘fair return’ for services rendered. How fair is that return when we consider those who are going to have to decide between eating or heating this winter though? Experts have predicted that huge price increases from other energy companies is sure to follow and will no doubt be met with the same level of public anger. Npower have defended this by hiding behind the same excuse of governmental pressures and targets leading to a ‘tendency’ or need to increase energy prices. It’s clear however, that these are simply market forces at work. If Sainsbury’s was to increase the price of a loaf of bread one week, it wouldn’t come as a shock to see Asda or Tesco following suit a week later. Regardless of what the energy companies say it’s hard to ignore the marketplace at work here, and it’ll be interesting to see how the general public (and the government) react to such forces.