Power bills to break £1,000-a-year barrier with charges set to rise by 15%

Gas: Prices set to rise by 15 per cent
12 April 2012

Household energy costs could soon break through the £1,000-a-year barrier, families were warned yesterday.

The price of gas and electricity is expected to soar by up to 15 per cent as suppliers respond to increases in wholesale prices.

The financial blow will add to the misery of the millions already struggling with high mortgage repayments, rising petrol and food costs and record debts.

Many will be left in "fuel poverty" - defined as those whose household fuel bills swallow up at least 10 per cent of their income.

British Gas and nPower have already added 15 per cent to tracker tariffs, which are based on wholesale costs.

Other tariffs are expected to follow.

Typical dual-fuel charges are already £912 a year and the predicted increases would see bills rise to £1,049.

Customers of Scottish Power, the most expensive provider at present, will have to pay more than £1,100.

Typical gas bills would go up from £568 to £653, while electricity charges would rise £50 to £412.

Karen Darby, of SimplySwitch, a price comparison site, warned consumers to prepare for a bumpy ride.

"Tracker tariffs have already gone up 13 to 15 per cent so I'd have thought we will be seeing price increases of that order in the new year," she said.

"As we have seen over the past three years, when wholesale prices escalate, suppliers have done double-digit price increases followed by more increases.

"Nobody wants to be branded a Scrooge by making an announcement before Christmas, so I would imagine hearing something by February. And once one does it, all the others will follow."

Catalyst Consumer Services, an energy broker, has forecast that retail energy prices will rise 10 per cent, which would still add more than £90 to typical dual-fuel bills.

Since February, annual forward gas prices - the amount suppliers pay in advance for energy - for 2008 have risen 42 per cent to 47p per therm, about 10p more than forecast.

Energywatch, the industry's official consumer body, said there was "no justification" for fuel price increases because wholesale costs were still lower than their peak last year and suppliers had still not passed on all the savings to consumers.

A spokesman said: "A year ago 3.5 million households across the UK were in fuel poverty.

"We have reached four million now and every 10 per cent increase in costs adds another 400,000."

Average energy costs for households were last above the £1,000 bar rier in the first quarter of this year, following a sustained period of swingeing increases.

British Gas took 17 per cent off in March, with another 3 per cent the following month.

The company, which is Britain's biggest energy supplier with ten million gas and six million electricity customers, made the move after it was deserted by almost a million customers in 2006.

Centrica, which owns British Gas, yesterday said high wholesale prices had cut margins at its residential arm, which made a £553million profit in the first half of the year.

A spokesman said: "The high wholesale prices will, if sustained, create a more difficult environment for retail energy suppliers in the UK going into 2008

"We will continue to monitor this with regard to future pricing policy."

Supplier nPower said gas distribution costs were going up with environmental costs also putting pressure on the industry.

A spokesman said: "We have been swallowing huge amounts of costs but it can't go on indefinitely."

Gas wholesale prices have gone up because they are linked to oil prices.

Electricity prices are affected because gas is used by power stations to generate energy.

Mervyn Kohler, of Help the Aged, said: "Faced with fuel price increases, older people switch their heating down which prejudices their health, and leave hats and coats on in the home or stay in bed longer, which is not good for their quality of life."

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in