Npower set to hike prices in March

Energy company Npower said on Friday that it will hike its standard tariff gas and electricity prices by 4.8% and 15%, respectively, from 16 March.

The move, which marks the first price increase since October 2013, means a typical dual fuel energy bill will rise by around 9.8%, or £109.

The new charges will affect approximately 50% of Npower’s customers. The company has a higher percentage of fixed-rate tariff customers than most large suppliers.

Npower also announced the launch of an exclusive four-year fixed term tariff for its current standard customers, where the exit fee has been waived in recognition for their loyalty.

Friday’s increase includes a change to Npower’s standing charge of £55 for electricity, bringing it in line with the rest of the market.

The company pointed out that since it last lifted prices 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.

Simon Stacey, managing director of domestic markets, said: “This is a hugely difficult decision, and we’ve delayed the date this takes effect until after the coldest months of the year. We’ve also made sure that our most vulnerable customers won’t see any impact until May.

“Npower has some of the most engaged customers of any major supplier - one million of our customers switched to another of our tariffs last year and around half of our customers aren’t on a standard variable tariff. To encourage even more engagement, today we’re launching a fixed tariff just for our existing customers who are still on an SVT, that will fix energy prices for the next four years with no exit fees.”

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

"It’s a sign that higher input prices – seen across UK industry – are starting to bite. Someone has to pay for it and that burden is going to fall on the British consumer. Food and clothing retailers are next line."