npower have announced a price rise of 9.8%, effective 16 March 2017
The price rise, which breaks down to a 4.8% rise for gas and a whopping 15% for electricity, is the single-highest price rise from a big six supplier since 2013.
The npower price rise will affect the 1.4 million customers currently on a standard variable rate energy tariff from the big six supplier.
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npower became the second big six supplier to announce a price rise for 2017, after EDF announced in December it would also raise its electricity prices by 8.4%. However, in 2017, all big six suppliers did eventually go on to raise their prices.
To read more about this supplier, including full price history, customer satisfaction scores and where their average bill cost ranks among other gas and electricity suppliers, view uSwitch's npower supplier page.
What should I do about the npower price change?
If you're currently on npower's standard variable rate plan — either dual fuel, gas only or electricity only, you're prices will increase beginning 16 March 2017.
For dual fuel customers, this rise will equate to £109 per year on average. This part of the npower price rise is the biggest for any big six supplier since 2013.
To avoid the npower price rise, run a free energy comparison to check how much you could save by switching.
Why did npower raise their prices?
npower blamed increases in the cost of energy on the wholesale markets as well as on the cost of delivering on obligations as a result of government policies. These government policies included installation of smart meters and investments in renewables.
Wholesale electricity prices have risen by 36% since April 2016, but Ofgem says the npower price rises still need to be justified.
Ofgem said that energy suppliers are able to buy their electricity on the wholesale market at forward prices and as a result could have avoided such high price rises.
"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," an Ofgem spokesperson said.
A government's Business and Energy department echoed Ofgem's sentiments.
"Suppliers are protected from recent fluctuations in the price of wholesale energy, which they buy up to two years in advance, and prices remain significantly lower than in 2014," a spokesperson said.
npower said it was the first time it had raised prices for three years.
"This is a hugely difficult decision, and we've delayed the date this takes effect until after one of the coldest months of the year," said Simon Stacey, npower's managing director of domestic markets.
npower also said that 1.4 million of its customers on existing standard tariffs will be offered a four-year fixed-price tariff with a 4.8% discount.
In addition to this, its pre-payment customers will not be affected by the price rise, and 80,000 people who receive the Warm Home Discount will in effect pay no increase until May 2017.
Who else raised their prices in 2017?
- SSE announce new energy price change in March 2017 by 14.9%
- ScottishPower price change increased by 7.8%, consisting of a gas price rise at 4.7% and electricity at 10.8%
- EDF Energy announces price rise however they cut gas prices by 5.2% at the start of 2017
- E.ON energy price changed by an average of 13.8%, and gas prices by 3.8%
- British Gas price rise electricity prices rose by 12.5% in September 2017 after stating they would freeze prices until August 2017
Will npower raise prices in 2018?
It's difficult to predict how any energy company will act when it comes to raising or freezing its prices.
npower's price rise may not have been a shock since it was the second major price rise of 2017. However, the amount they raised prices by was a big surprise to the industry, not to mention its customers.
Energy suppliers do have the luxury of buying their electricity on the wholesale markets two years in advance, so they can get it at potentially much cheaper prices and pre-empt any price rises on the wholesale markets.
This means the argument that blames energy suppliers’ price rises on increasing wholesale market prices doesn't always add up when it comes to customers' bills.
Having said that, the backlash npower received from its customers, Ofgem and the government will likely mean that they are going to try to avoid raising prices again anytime soon.
However, there are no guarantees, so it's always worth comparing the market and checking for the best possible energy plan in your area.
If you have been affected by an energy price rise, then run a energy comparison to see if you can save on your bills.