Npower hit by backlash over 10 per cent price hike

Npower has come under fire after announcing plans to hike gas and electricity prices by 9.8 per cent '“ a move that will add £109 to annual dual fuel bills.

Npower announced an increase in prices.

The Big Six energy firm said the move, which will affect 1.4 million UK customers on a standard variable tariff, comes in the face of rising wholesale energy costs and will come into effect on March 16.

Simon Stacey, managing director of npower’s domestic markets, said it was a “hugely difficult decision”.

But energy regulator Ofgem rebuked npower, saying it does not see “any case” for significant price increases where suppliers have bought energy in advance, and demanded the firm justify the decision to its customers.

An Ofgem spokesman said: “Our new supplier cost index shows that costs for energy suppliers have risen over the past year after having fallen for the previous two to three years.

“However, we don’t see any case for significant price increases where suppliers have bought energy well in advance. Npower must therefore justify the decision to its customers.”

Mr Stacey insisted npower “delayed the date this takes effect until after the coldest months of the year” and said its most vulnerable customers will not be impacted until May.

The UK Government also weighed in, with Prime Minister Theresa May’s spokesman saying that the Government was “concerned” about the move.

“Obviously, we are concerned by npower’s planned increases...we expect energy companies to treat their customers fairly, and are being clear where markets aren’t working we are prepared to act.”

Npower’s price hike on typical dual fuel annual energy bills is made up of an average increase of 4.8 per cent on gas and perhaps 15 per cent on electricity.

“Since npower last raised its prices three years ago, there have been increases in wholesale energy costs and rises in the cost of delivering Government policies, such as smart metering, renewables obligation and the capacity market. This trend is set to continue,” the firm said.

Experts believe the company’s decision could be a precursor to other energy providers ramping up prices.

Neil Wilson, senior market analyst at ETX Capital, said: “Npower raising prices by nearly 10 per cent only adds to the fears inflation – driven by high oil prices and weak sterling – will crimp consumer spending throughout 2017. We have to assume some of the other Big Six energy providers will follow when they review in April.”