Profits up at npower after energy bills hike

Just days after British Gas announces a rise in profits, npower follows suit.

Less than four months after raising customers’ energy bills, npower has announced a significant rise in its operating profits in the UK.

The energy supplier’s parent company, RWE, has reported a 10% increase in group earnings before interest, taxes, depreciation and amortisation for 2012, as well as a 25% increase in its UK operating results.

The news is likely to confuse customers who were informed that the price hikes implemented by the company late last year were necessary.

From November 26th, the energy company raised its gas prices by 8.8% and the cost of electricity by 9.1%, which pushed the average customer’s dual fuel bill from £1,244 to £1,352 a year – a rise of £108.

Necessary increases

npower said the costs of new statutory schemes, increases in distribution charges and the price of gas for the coming winter were all being driven up by external factors such as government policy.

At the time,Paul Massara, Chief Commercial Officer at the company, commented: “Although we have managed to smooth out the worst fluctuations and protect our customers for as long as we can, we are now having to pass on some of these costs.”

“We support moves to reduce CO2 emissions, but new government schemes will mean that energy bills will rise. We must make sure that they provide value for money and that people understand how they will be affected.”

However, the extent of npower’s profit rise is likely to raise eyebrows among the consumers who were affected by energy bill hikes.

Consumer questions

According to Ann Robinson, Director of Consumer Policy at uSwitch.com, npower will need to answer questions from customers asking why their energy bills were raised in the first place.

“It’s a valid question and npower customers deserve a valid answer, especially those who were forced to go cold this winter for fear of the cost of heating their home,” she explained.

The right course of action will be for npower to help UK consumers by cutting its prices again, Ms Robinson said.

While being strong and financially secure is essential to the existence of the energy market, this is only one factor in a bigger picture which needs to strike a balance between energy companies posting healthy profits and people being forced to “go cold”.

“Investing in the UK is hugely welcome, but so is taking every step possible to help keep its citizens warm. In light of today’s announcement we would urge npower to cut its prices again,” Ms Robinson added.

Over the past decade, the average annual household energy bill for npower customers has almost trebled – from £521 in January 2004 to £1,352 in January this year.

Helping yourself

With no immediate price reduction on the horizon, customers can help themselves by using less energy, making their homes more energy efficient and paying less for what they do use by moving to a more competitive plan, Ms Robinson explained.

Currently, there is almost £250 difference between the cheapest and most expensive tariffs on the market, based on a medium user customer using 3,300 kWh of electricity and 16,500 kWh of gas.

Under E.ON’s standard cash and cheque price, customers pay £1,370 a year on average, while SSE’s Discount Energy Bonus with paperless billing costs £1,134 a year – potentially saving people £236.

Ms Robinson elaborated: “Households can easily achieve a valuable saving just by moving to dual fuel, paying by direct debit and signing up to a competitively priced deal.”

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  • sparrow

    how can i find a cheaper provider

  • worried of kent

    usual rip off how much longer can this go on before lots and lots of people are unable to pay?

  • maginty

    why should the consumers have to pay the cost for meetign new euro standards for energy – surely the cost for research and development should be taken directly from the companys profits! bankers and greed! dispise this dishonourability – we should pay because they say so?! what kind of governing body do we have in this country. its a disgrace. most of the energy profits should be going into environment payback – and not to line the deep pockets ofthe greedy. i remeber the energy bills being less than £500 per annum

  • Dave

    Eon do the same raise energy prices in september because they need to. Then in april have to pay me back what I have not used normally £50- £80. This after making big profits.
    About time regulator started using what little power it has to protect customers from being ripped off every year especially as all price rises are well above the inflation rate, instead of doing what the energy suppliers tell it to do.

  • confused

    I have just been refunded £143 in overpayments but my monthly payment has risen from £161 to £173 a month for dual fuel….I just dont understand it!!!

  • http://www.facebook.com/Phatspyder Pete Spinks

    Maybe the answer is a part re-nationalisation of the energy sector so we, as the customer and share holders of sorts in these companie, through the taxes we pay can have greater control and say in what happens in these circumstances. That is if the government has the bottle to stand up and fight for us, which if present and past records are anything to go by they won’t…

    • Dave Evans

      I totally agree with your comments except that I believe that it should be fully nationalised. I have been a socialist all my life and believe in the principle of Nationalisation, however, when the state owned industries were re-privatised in the Thatcher era it was under the excuse that they were run inefficiently and would be better run by private businesses. I see no reason why a state owned industry cannot be managed efficiently by whatever government is in power. The major difference though is that the profits from that industry would be going into the State’s coffers rather than private pockets and as the government’s responsibility is to it’s people first then those profits could be used to subsidise prices when needed. With the buying power of a whole industry, our energy prices wouldn’t be as high as they are now.

  • http://www.facebook.com/richard.freeman.921 Richard Freeman

    nPower recently told me that despite my energy bills costing £90 per month and me paying £90 per month that I would have to start paying them £130 a month to ensure my account didn’t go into the red over the winter months. Looking at this another way, they want me to build up an execess of cash in their accounts for their energy brokers to gamble with.

  • john

    changing your energy company does not work. you start off cheaper and up paying more?

  • Caroline

    Every company u switch too start of cheap then the following year prices rise !!! Energy watch me thinks

    • Kathy

      I am sitting here in a scarf and hat plus clothing of course. Am so cold but afraid to turn the heating on until later. It is cruel living in this country. Should turn off the computer actually.

  • whitey42

    Why are we all being charged radically different prices for what is essentially the same gas and electricity? To to renationalise and put these crooks out of business.

  • belle

    I’m all electric and my payments went. from 91 pounds to 154 pounds a month. I was told so I wouldn’t fall short on my payments

  • Gerald Clark

    I use electricity and oil, as there is no gas main near my house. There does not seem to be much to be gained – Ive tried it twice – by switching electricity supplier. Any ideas?

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