UK consumers should prepare themselves for a sharp price increase in energy prices after npower, one of the UK's main power suppliers, announced that it is intending on increasing energy costs in response to a rise in gas prices on the wholesale market.
Around four million households across Britain are facing around £180 added to their bills for both gas and electricity meaning that the average home will be paying out a record £1000 in annual fuel bills; this is around a 15 per cent increase.
npower have insisted that the increase is simply a response to a rise in gas prices which have been affected by the rocketing cost of oil which this week saw a single barrel reach the $1000 mark.
However, according to energywatch, the independent consumer watchdog, the price increase appears to be in contrast to reports that wholesale gas prices fell by 50 per cent in 2006 and while the industry enjoyed the lull, customers were slow to reap any benefits, instead, suppliers waited until spring 2007 before they passed on minimal reductions with an average 15 per cent off gas bills and an even more miserly 4.9 per cent discount on electricity bills.
Now there are fears that the other energy providers are going to follow suit. Martin Lewis of MoneySavingExpert.com, comments: "What the big beasts of the energy world, like npower and British Gas do, others follow; so do a comparison and switch to the listed cheapest supplier today, and it’s likely any savings you make will be eaten up some time in the next month or so when that company announces a price rise too. Frankly all most people can do is sit tight and wait until this latest tranche of rises passes."
"Until an announcement is made this is not a ‘done deal’. However, price rises have been on the horizon for some time so I don’t think anybody will be particularly surprised by this speculation," adds Tim Wolfenden, Head of Home Services at uSwitch.com.
"At the moment rises have only been on ‘niche’ plans – ones that don’t affect many customers. The ‘biggie’ will be when one of the suppliers slaps a price increase on their standard plans – this is the one that will hit and hurt the most customers.
"And once one of the suppliers makes this move it will give competitors the green light to go ahead with price increases of their own. This speculation could rapidly turn into price rise misery for consumers in 2008."
It is also thought that the recent cold snap has been contributory factor in the price rise after Britain was forced to import gas from abroad this week.
Charities for the elderly are also expressing concern as older people and the infirm are likely to be the demographic worst hit by the imminent bill hikes.
Allan Asher, Chief Executive of energywatch added: "energywatch will be campaigning to inhibit suppliers from passing all their risks on to customers. We certainly won't let them get away with it without a fight."
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