Npower price hike sparks threat of govt crackdown

The government has threatened a fresh crackdown on energy providers after npower hiked prices for more than a million customers by 9.8% – adding £109 a year to bills.A spokesman for the prime minister said ministers would intervene if the energy market was shown to be failing.“Obviously, we are concerned by npower’s planned increases. The government is committed to getting the best deal for households,” he said.“Suppliers are protected from the recent fluctuations in the wholesale energy prices in which they are buying up to two years in advance. So we expect energy companies to treat their customers fairly, and are being clear that where markets aren’t working we are prepared to act.”Npower, one of the big six energy providers, said the rise in dual fuel bills would affect about half of its customers, or 1.4mn households. From March 16, it will raise electricity prices by an average of 15% and gas prices by 4.8%. Other big six providers are expected to follow with increases.With average household bills for npower’s dual fuel customers expected to increase from £1,077 to £1,187 a year, Claire Osborne, energy expert at the price comparison website uSwitch, said: “This price rise – the largest single rise from a big six supplier since 2013 – is a bitter blow for consumers who have just come out of a very chilly winter.“Npower has blamed the rise on the increased cost of buying energy in global markets – but they weren’t so quick to reduce energy bills when wholesale prices were low.”The average dual fuel bill in the UK is £1,066.The move comes a fortnight after the industry regulator, Ofgem, warned the big six against raising prices, saying it was “not obvious” that tariffs should go up despite rising wholesale prices. But energy companies have so far escaped a severe regulatory crackdown. Concluding an inquiry into the sector last year, the competition watchdog declined to cap bills and instead opted to help customers switch to cheaper deals.Npower blamed its planned rises on increases in wholesale gas and electricity costs and the cost of delivering government policies, such as smart metering and subsidies for renewable energy. It said wholesale electricity prices had risen 38% over the last 12 months, while gas prices had risen 60%.Simon Stacey, the company’s managing director of domestic markets, said: “This is a hugely difficult decision, and we have delayed the date this takes effect until after the coldest months of the year. We have also made sure that our most vulnerable customers won’t see any impact until May.”Consumer groups said the move would put further pressure on household finances and urged energy customers to shop around to get a cheaper deal.Hannah Maundrell, editor-in-chief of the comparison site money.co.uk, said the price hikes were unfair.“This is a slap in the face for many already struggling families,” she said. “It is a stark reminder that we all need to be tightening our purse strings to cope with price rises and looking where we can make savings.”German-owned npower is the second of the big six suppliers to announce price rises. EDF Energy said in December its standard dual fuel direct debit price would increase by 1.2% to £1,082 a year.Martin Lewis, founder of MoneySavingExpert.com, said the remaining four of the big six – British Gas, E.ON, Scottish Power and SSE – were likely to follow and urged consumers to take matters into their own hands by demanding a cheaper deal.“Almost certainly by the end of April we will have seen all the big six firms having hoicked their prices by between 5% and 10%,” he said.“Do not groan, moan or whinge. Take action. Everybody, with every firm, should make sure they’re on the very cheapest tariff. The best thing to do is a whole-of-market comparison, but even if you’re not willing to do that, call up your existing company and say: ‘Am I on your cheapest deal?’ Most people aren’t, and hundreds can be saved just by one phone call.”The government is expected to address concerns about the energy market when it publishes a consumer green paper in the spring.Iain Wright, the Labour MP who chairs the House of Commons’ business, energy and industrial strategy committee, said the price hikes showed that npower took its loyal customers for granted.