One of the most popular energy providers outside of the Big Six has announced that customers on its leading tariff are to see prices rise substantially.
First Utility, which has led the way for smaller energy suppliers in a bid to break the market dominance of the Big Six, has attracted tens of thousands of customers over the last two years.
Last year, it launched what were the cheapest fixed and the cheapest overall plans on the market – the iSave v12, with an average bill size of £1,054, and the iSave Fixed v4 March 2014, with an average bill size of £1,087.
The company has attempted to steal a march on its larger rivals by undercutting them and offering more competitive tariffs which it says provide customers with a service that matches their needs at a lower price, but many are set to be affected by the new changes, which will be implemented on June 1st.
Prices on the rise
Customers are set to be automatically switched from the firm’s cheapest iSave v12 tariff onto the more expensive iSave Everyday from June 1st, which will push up the average annual dual fuel bill for these consumers by 18 per cent.
This is equivalent to around £16 a month, or £200 a year, which is likely to have a significant impact on the finances of those affected, but First Utility has taken steps to defend the increases.
Company founder Darren Braham said that a range of factors are to blame for the increase, including network costs, the increasing price of wholesale energy and the “social and environmental obligations mandated by the government”.
“Although First Utility has been subject to the same challenging cost increases as other energy suppliers, we chose to delay changing our prices for as long as possible and until customers were through the coldest winter months, whereas the Big Six all announced price rises by the end of 2012 during a period when heating your home costs you the most,” he added.
Mr Braham added that the company remains “committed” to delivering the best value energy for consumers, and pointed to First Utility’s Price Promise to guarantee its standard prices remain lower than those of the Big Six, combined with a “very competitive fixed price tariff”.
However, the guarantees will do little to soften the blow for the company’s 180,000 customers, many of whom switched to First Utility to avoid price increases made by the Big Six.
Stick or twist?
First Utility’s 18% hike exceeds the 6% increase made by British Gas last autumn, as well as npower’s price rises for gas (8.8%) and electricity (9.1%).
The price rises follow recent hikes by fellow smaller suppliers Ovo Energy and Co-operative Energy. Ovo is set to increase gas and electricity costs by 5.8%, which will add around £68 a year to average dual fuel bills, while Co-operative is boosting gas bills by 8.5% and electricity bills by 9% from May 9th, which will affect 106,000 customers.
These increases, combined with First Utility’s latest announcement, have fuelled speculation that the Big Six energy providers may be set to follow suit with price hikes of their own in the coming months.