Shock 10% energy bill hike to cost Npower customers over £100 a year

Energy firm Npower said on Friday (3 February) that it will hike prices by nearly 10% from 16 March, with approximately half of its 1.4 million customers set to be affected. One of Britain's "Big Six" energy providers, Npower said the cost of a typical dual fuel annual energy bill will rise by an average 9.8%, or £109 ($136.5).

The price hike is made up of an average increase of 4.8% on gas and 15% on electricity. It also includes a change to Npower's standing charge for electricity to £55, which has now been brought in-line with the rest of the market.

Npower, which it last raised prices three years ago, said the increases in wholesale energy costs and rises in the cost of delivering Government policies, such as smart metering, renewables obligation and the capacity market, all had an impact on its decision.

The company said the trend of higher costs is set to continue, with network and policy costs representing an increasing share of domestic electricity bills.

"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," said Simon Stacey, Npower's managing director of domestic markets.

"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 (SVT). 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."

The decision marks a sharp turnaround from a year ago, when the former FTSE 100 group became the fourth of Britain's "Big Six" energy companies to cut its tariffs on the back of a decline in gas prices.

In February last year, the group, which is owned by German energy giant RWE, said it would cut its standard tariff by 5.2% starting from 28 March, meaning approximately 1.2 million customers saw the average cost of their tariff decline from £623 to £591.

"These price hikes are a big shock to the system for customers and seem really unfair," said Hannah Maundrell, of comparison website money.co.uk.

"If you're with Npower it's definitely time to look elsewhere and switch if you'd be better off.

"This is a slap in the face for many already struggling families. 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. "