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Energy bills to rise up to 28% for thousands in UK as fixed contracts end

Energy bills to rise up to 28% for thousands in UK as fixed contracts end

With 77 deals expiring before end of April, many customers will find themselves being rolled on to most expensive tariffs

Thousands of UK households are facing gas and electricity bill rises of up to 28% as fixed price contracts signed before recent energy price increases come to an end.

So far this winter, EDF, npower and Scottish Power have all announced hikes, meaning the customers of those companies need to look carefully at what they paying, particularly if they coming off a fixed tariff.

Moneysupermarket has said 77 fixed energy deals are set to expire before the end of April, leaving average households typically facing a £200-a-year increase to around £1,100 a year for gas and electricity.

Gas and electricity price increases of up to 15% – and much more for those coming off old fixed tariffs – have left consumers scrambling to get on a another fixed deal. But even those who switch supplier are likely to end up paying more over the coming year.

EDF, npower, Scottish Power and SSE are among those with tariffs finishing, alongside deals from smaller suppliers such as Spark and Extra Energy. When fixed energy deals end providers roll customers on to their standard variable tariffs, which are typically their most expensive.

Some customers who were on especially cheap tariffs have been told their bills will rise 28%.

One supplier, npower, shocked the industry and even the regulator Ofgem when it announced it was raising electricity prices by 15% while gas bills will rise 4.8% adding a typical £109 a year to average bills.

The other firms to raise electricity prices have announced rises of around 8%.However, British Gas said last week it was freezing bills.

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Moneysupermarket said consumers could switch penalty-free up to 45 days before their existing deal is due to end, under the regulator’s switching rules.

Currently the cheapest providers are names that many consumers will be unfamiliar with, such as Iresa, Economy Energy and Tonik. Of the big six providers, Scottish Power’s online fixed saver is one of the cheaper deals.

Stephen Murray, energy expert at Moneysupermarket, said: “The energy market is really unpredictable at the moment and a huge part of that is rising prices. In June last year the cheapest deals were below £750, whereas currently the average cost of the top 10 cheapest tariffs is £880. It is worth noting that these deals still represent a significant saving on standard variable tariffs.”

He said customers on expiring tariffs should act now to lock in new fixed deals and avoid being rolled on to standard variable tariffs.

“The British Gas price freeze may sound like a fair alternative, but customers are still overpaying by around £170 and so the message is the same – don’t rest on your laurels, standard tariffs still remain among the most expensive. It only takes a few minutes to swap providers to save almost £200 each year.”

Mobile phone users are also facing more expensive bills in the coming months, following the rise in inflation. Vodafone, EE and O2 have said millions of mobile phone customers will face inflationary mid-contract price rises in the next couple of months.

EE is raising some customers’ monthly bills by 2.5% from 30 March, in line with January’s retail price index inflation figure. O2 will increase monthly its charges by 2.6% in April, and Vodafone bills will rise by March’s inflation figure – also from April.

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EDF to raise electricity prices from March

EDF is to raise its standard electricity tariff for UK customers by 8.4 per cent from next March in defiance of government efforts to drive down bills.

The increase — the French utility’s first in three years — highlights renewed energy price inflation over recent months as commodity markets have rebounded. Constraints in electricity generating capacityand depreciation of the pound since the UK’s vote to leave the EU have also contributed.

EDF joined several other utilities in promising to freeze its standard variable power price over the cold winter months but became the first to admit prices would rise thereafter.

The increase — expected by analysts to be followed by other suppliers — sets up a showdown with the UK government next spring, when ministers have promised to publish a green paper including measures to tackle high energy bills.

Government efforts are focused on encouraging customers to switch away from relatively expensive standard variable tariffs of the kind increased by EDF on Friday on to cheaper fixed price deals.

However, analysts and industry executives say that consumers should expect power tariffs of all kinds to rise in coming months in response to rising wholesale costs.

According to data from S&P Global Platts, UK day-ahead wholesale electricity prices rose 16 per cent last month and are up 63 per cent over the past year.

Gas prices have also risen but at a more modest pace and EDF said it would offset its increased electricity tariffs with a 5.2 per cent cut in its standard gas price from January. This would result in a net increase of 1.2 per cent next year for consumers on a standard dual fuel tariff.

“We want to help loyal customers by cutting gas prices ahead of the coldest winter months, and delaying electricity increases until later in the year,” said Beatrice Bigois, managing director of customers at EDF Energy.

“Many industry commentators have said that prices charged by energy suppliers will rise after the winter. We are being open about the fact our electricity prices will go up after our price freeze.”

EDF and the other big six suppliers — British Gas, Eon, Npower, Scottish Power and SSE — have been losing market share to dozens of smaller competitors during the past few years. However, this trend has begun to reverse this year because the large groups are better protected against rising wholesale prices by long-term hedging.

GB Energy, a small UK utility, blamed rising costs for its collapse last month and analysts and industry executives have forecast more failures in months ahead.

To keep the pressure on the big six to keep bills down, Ofgem, the regulator, this week launched a league table “naming and shaming” suppliers with the highest proportion of customers on expensive standard tariffs and Philip Hammond, chancellor, said last month that the government would “look carefully” at whether the market was working fairly in its green paper next year.

Consumer groups said the EDF price rise was a reminder of the importance of shopping around for cheaper deals. Peter Earl, head of energy at Comparethemarket.com, a price comparison website, said households could save an average £327 a year by switching away from a standard tariff. However, with fixed rate prices also rising, he said customers should prepare for a “post-Christmas energy shock”.

Britain facing energy crisis that could see families pay extra to keep the lights on while neighbours ‘sit in the dark’

Britain’s increasing reliance on “intermittent” renewable energy means that the country is facing an unprecedented supply crisis, a senior Ofgem executive has warned.

Andrew Wright, a senior partner at Ofgem and former interim chief executive, warned that households could be forced to pay extra to keep their lights on while their neighbours “sit in the dark” because “not everyone will be able to use as much as electricity as they want”.

He warned that in future richer customers will be able to “pay for a higher level of reliability” while other households are left without electricity.

Electricity pylons rising through mist at dawn, view of The Marshwood Vale from Lambert's Castle, Dorset, England
Electricity pylons rising through mist at dawn, view of The Marshwood Vale from Lambert’s Castle, Dorset, England CREDIT: ALAMY

Mr Wright said that because Britain has lost fuel capacity because of the closure of coal mines, there is now “much less flexibility” for suppliers.

In a stark warning about the future of energy supply in Britain, Mr Wright said that consumers could be forced to pay more if they want to ensure they always have power.

“At the moment everyone has the same network – with some difference between rural and urban – but this is changing and these changes will produce some choices for society,” he told a recent conference.

“We are currently all paying broadly the same price but we could be moving away from that and there will be some new features in the market which may see some choose to pay for a higher level of reliability.

 “One household may be sitting with their lights on, charging their Tesla electric car, while someone else will be sitting in the dark.”

Mr Wright, who Ofgem last night insisted was speaking in a “personal capacity” appeared to lay blame to any future supply issues on the recent focus on renewable energy.

He said: “The system we are all familiar with has some redundancy built into it. It was pretty straightforward and there was a supply margin, but increasing intermittency from renewable energy is producing profound changes to this system.

“We now have much less flexibility with the loss of fossil fuel capacity. Coal has been important, but this is disappearing.”

Wind turbines in Scotland
Wind turbines in Scotland CREDIT: DANNY LAWSON

 He added: “In the future not everyone will be able to use as much as electricity as they want, and there will be a need to re-write the rules.”

An Ofgem spokesman said: ” Ofgem is fully committed to delivering secure supplies for all consumers now and in the future. This is our number one priority. This is why we have driven up network reliability standards and worked closely with Government to ensure secure energy supplies.”

“In order to protect consumers every regulator has to look a possible future challenges. Mr Wright was talking at an University conference in a personal capacity and looking at possible issues that might or might not arise in 10-15 years time.”

Philip Hammond, the Chancellor, has previously said that Britain will need to invest “eye-wateringly large sums of money” just to keep the lights on.

The Chancellor put the cost at around £100 billion in the next 20 years to ensure the country meets its energy needs.

Existing energy customers barred from cheapest deals

Four of the UK’s largest energy companies have been barring their own customers from some of the best deals for gas and electricity, the BBC’s Moneybox programme has learnt.

The cheapest deals are often reserved for new customers only.

Meanwhile existing customers have been offered deals which can be hundreds of pounds a year more expensive.

The four companies, E.ON, EDF, SSE and British Gas said they were simply responding to changes in the market.

While the British Gas tariff has now been withdrawn, other suppliers are still restricting their offers to new customers only.

Such deals were originally banned by the regulator Ofgem in April 2014. Following a recommendation from the Competition and Markets Authority (CMA) in April this year, Ofgem let it be known it would no longer enforce these rules.

‘Gob-smacked’

The discovery of such deals has as come a surprise to some leading industry figures.

Ken Geddes is the chief executive of Scottish-based Energylinx, the fourth biggest energy price comparison business.

When the BBC told Mr Geddes about the new tariffs, he declared himself “stunned” by the difference between the prices some companies offered new and existing customers.

Mr Geddes immediately tested a new-customer-only tariff from E.ON, launched in mid-September.

He first applied as an E.ON customer and then as a customer of another company. The difference in the the two prices he got from E.ON was £260.

“Having spent over a decade doing this job, I don’t think I’ve ever seen that differential”, Mr Geddes told the BBC. “I’m just gob-smacked as to the difference in price”.

four gas rings

 

‘Filtered out’

Large differences in price between new and existing customers are not confined to E.ON.

In the summer, British Gas launched a new-customer-only one year tariff offered exclusively through Uswitch – the UK’s biggest energy price comparison website.

For new customers with average household energy consumption, the British Gas “Home Energy Exclusive Jun 17” tariff cost £735 a year. But for existing customers – barred from that deal – the best British Gas price for the same amount of energy was £989.

That British Gas tariff has now been withdrawn but others are appearing.

The SSE new-customer-only tariff, launched in September, offered new customers on average consumption a year’s energy for £759 . For existing customers, SSE’s best deal cost £972 – a difference of over £200.

Customers were unlikely to have learned such low-priced tariffs were available from their companies even if they searched Uswitch and Energy Helpline.

That’s because such websites start by asking users for the name of their existing energy supplier. New-customer-only deals from that supplier are then filtered out.

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EDF and British Gas bills

‘Very sorry’

As a long-standing customer of EDF, I wanted to find out what tariff I would be offered.

In a web-chat, I was told the tariffs available to me were: “Blue+ Price Protection Sep 2017” – costing £133 more than EDF’s new-customer-only tariff, and “Blue+ Price Freeze Sep 2018” costing almost £300 more.

Were these the “very best tariffs EDF offers?” I asked the agent.

“Yes” was the emphatic reply.

When pressed about the much cheaper new tariff EDF had just launched, the agent replied, “I’m very sorry. This is only for new customers – not existing customers”.

On Friday, EDF relaunched their new-customer-only deal, cutting the price by around £50 a year. So it’s a better deal than before but it’s still not for existing customers.

Strategy

Not all major energy suppliers plan to offer such tariffs.

Scottish Power’s commercial director Colin McNeill told the BBC his company would not offer them.

“These tariffs must stop,” Mr McNeill said. “We must recognise that we are still not a trusted industry, and perceived sharp practices do the industry no favours.”

With Scottish Power, he added: “Any of our customers can switch freely to any of our tariffs at any time.”

The four energy companies which have offered the new-customer only tariffs, E.ON, EDF, SSE and British Gas, all say that they are responding to changes in the energy market and that their new tariffs are part of a strategy to serve a wide range of customers.

All four companies declined the BBC’s invitation to be interviewed about their new exclusive offers.

Ofgem’s chief executive Dermot Nolan told the BBC that Ofgem had acted on the CMA’s recommendation “to make energy competition more similar to telecoms because on the whole that will mean lower prices and better deals for consumers”.

Energy supply cuts may send fuel bills soaring

Householders are being warned to brace themselves for a rise in their electricity bills as a series of freak events conspires to send wholesale prices rocketing.

Safety concerns at France’s nuclear power plants operated by the energy company EDF have led to many reactors being temporarily shut down. There have been similar suspensions in Belgium. In addition, a lack of rain in Norway and Sweden – whose hydro plants generate large amounts of electricity for their European neighbours – has limited both countries’ energy production.

The combined effect has been to send the price at which energy companies buy their power through the roof.

 

Last Monday, a UK energy company buying power on a next-day contract would have paid about £150 a megawatt hour. The average price a year ago was £38.10. For companies that had not agreed forward contracts, the cost has soared to more than £1,000.

Several smaller electricity suppliers have already raised prices or withdrawn competitive tariffs. Energy analysts say it will not be long before the big operators follow if, as looks possible, this winter starts with a protracted cold snap.

An index tracking the price power companies pay for electricity, produced by the consultancy Cornwall Energy, is at its highest since it started in 2012. “It is unusual for there to be significant volumes of outages in the French nuclear fleet, however this is also one of our tightest winters in recent times in terms of extra capacity, which has also influenced how high prices rise,” said Cornwall analyst Tom Edwards.

Twenty of EDF’s nuclear reactors have been stopped for checks on their steam generators, five more than would normally be shut down for maintenance at any one time. In July, EDF was forced to lower its 2016 nuclear output target to 395-400 TWh (terrawatt hours) from 408-416 TWh because of the need for “additional controls during the second half of the year” to show its reactors can operate safely. Last month, the group revised its nuclear output target again, from 380-390 TWh to 378-385 TWh.

A spokeswoman said it was looking at ways to ensure it could maintain electricity generation by using its thermal and hydraulic plants. She said EDF would buy more electricity on the European wholesale markets if necessary and use “contractual flexibilities with some industrial customers and individuals to limit their electricity consumption”.

Edwards said supply issues were currently to blame for price rises, but extra demand could soon be a factor. “The increase was primarily driven by rising wholesale prices, so the effect will be driven by supply and demand issues,” he said. “If it’s a cold winter and supply issues remain, then this should persist for the next three to four months. There has been some concern raised about how suppliers will cope over the winter if they aren’t able to hedge against these short-term price rises.”

 

Earlier this month, the Met Office predicted that the chance of the UK experiencing temperatures in the “cold” category was 30% – 1.5 times the usual risk – and warned that “contingency planners and others with sensitivity to cold weather might need to consider this elevated level of risk”.

Larger operators that generate their own electricity can protect themselves against rising wholesale costs. But this is not so for smaller operators. Earlier this month, Southend Energy, one of the larger independent operators, announced rises of 9% and 8.4% respectively on its fixed and greener tariffs.

“Some suppliers have increased the price of their fixed tariffs following the recent rise in wholesale energy prices, which is putting pressure on all suppliers’ costs,” said a spokesman for the energy markets regulator, Ofgem, which suggested many consumers could save about £300 a year by switching.

Edwards said the current uncertainty would be felt by consumers in the longer term. “Suppliers will increase their standard variable tariffs if costs do rise substantially, but this

will be affected by their hedging ahead of this winter. We would expect fixed tariffs in the future to be higher to take into account expected risk of short-term price volatility.”

B7EFWN ELECTRICAL POWER PYLON WITH SUPPLY CABLES OR LINES AGAINST A CLOUDY SKY ELECTRIC. Image shot 2008. Exact date unknown.

POWER PRICE SURGE Energy bills set to soar as Big Six gas and electricity giants prepare to pass on wholesale price rise

Sources say the average standard variable tariff could be set to rise 13 per cent from £1,063 to £1,201 per year

FAMILIES face a hike in their energy bills as power giants get set to pass on increases in the price they pay.

Wholesale gas and electricity prices are rising after a period of staying steady or falling.

 

Sources say energy firms are looking to pass on the price rises — despite The Sun’s campaign to highlight how customers are already overpaying.

It could see the average standard variable tariff rise 13 per cent from £1,063 to £1,201 per year.

Some firms could delay an increase as they “hedged” against wholesale costs rising by pre-buying power at lower rates earlier this year.

A source at one of the Big Six suppliers said: “Price rises are coming.

“None of us bigger firms will want to go first but it will come to a point where we have to.

“Hiking before Christmas will mean we get a lot of grief so firms will sit there now doing the maths to see how long they can hold off.

 

“The bigger ones can hold off a bit longer than the smaller ones.

“They pre-buy more power and also have deeper pockets to soak up tighter margins for a while.

“But don’t be surprised if some of the smaller suppliers raise prices.”

E.ON has already warned investors they have not hedged enough for their UK business.

 

Co-op raised the price of their standard variable tariff last month.

Critics said the Big Six are quick to pass on price rises but slow to pass on any savings.

Will Hodson, of consumer collective TheBig Deal.com, said:   “When wholesale prices dropped it took them forever and a day to pass those savings on.”

E.ON said it would not speculate on pricing.

£511m saved on energy bills by negotiating

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According to a You Gov survey commissioned by npower, Small and medium sized businesses (SMEs) in the UK saved £511 million on their energy bills in the last 12 months and around 45% of them saved up to £10,000 per year.

This is all because they negotiated a better deal from their suppliers, with as many as 93% of SMEs stating that taking the time to negotiate contracts really is worth while with average savings per business valued around £2,800.

However, despite the financial benefits of negotiating with energy companies, still 70% of SMEs don’t think to ask for discounts and price savings.

To encourage more businesses to negotiate with their suppliers, the Big Six has launched a campaign which offers tips on how to get the most out of their negotiations, including the importance of research and planning ahead.

Philip Scholes, Head of npower Business said: “This research shows that businesses across the UK are reaping the dividends of negotiating their supplier contracts. However, not all firms are entering discussions with their provider, which could prove to be a missed opportunity in the long term.

“That’s why we launched this campaign – we’d encourage all British businesses to look at their supplier costs and particularly their annual energy costs to help improve their bottom line.”

Earlier this month, the CMA stated SMEs paid around £280 million more per year between 2007 and 2014 to the Big Six.

Gas Bills to be cut by 7% announce Ecotricity

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Britain’s greenest energy company, is cutting its customers’ gas bills by 7% from April. Ecotricity believe the cuts, available to both new and existing customers, will save the average customer nearly £50 a year on their only tariff – ‘Green Gas.’

The company said it was making the cut following recent falls in the wholesale gas price – and called for other energy companies to better reflect wholesale reductions in their own price cuts.

The price cuts follow similar price cuts from large energy suppliers in the wake of plummeting wholesale gas prices. However, Ecotricity’s cuts are the largest in the industry so far. Earlier this week British Gas and EDF Energy cut their gas prices by 5%.

In the past 12 months the price of wholesale gas has fallen by as much as 35%, caused by lower global commodity prices and a mild winter.

Ecotricity said the price cuts would save the average customer £46 a year. The utility, which has one flat-rate gas tariff for all its customers, called for other utilities to make more aggressive price cuts in light of the fall in wholesale gas prices.

Founder Dale Vince said the 5% cuts from the rest of the industry do not go far enough.

He added: “We think 7% better reflects the reduction in wholesale costs. The 5% reductions that we’ve seen so far around the industry just aren’t enough.

“It’s all of our customers who’ll get this reduction, too – no matter when they joined us or how they choose to pay; that’s part of our ethical approach – one tariff and one price for everybody. We think that’s how it should be.”

Ecotricity’s Green Gas tariff is the only one in Britain with a green component and the only one with a frack-free promise – the company also recently announced that they’ll be making their own green gas from grass using its Green Gas Mills.

Mr Vince added: “A new kind of gas is entering the energy market, the green kind – and it’s the genuine alternative to fracking in Britain.

“Oil prices have fallen, so we’re seeing reductions in gas prices across the industry now – but one thing is for sure, they’ll go up again. It’s only by making our own green gas in Britain that we can keep energy bills affordable in the long term by creating energy independence – and we won’t need to frack the countryside to get our gas.”

Last month, Ecotricity lodged a planning application for its first anaerobic digestion plant, which if approved will be the first of three Green Gas Mills from the energy provider.

The plant will create gas from grass and rye sourced from within 10 miles of the plant, and will also include training facilities to offer local college students work experience in the anaerobic digestion industry.

100,000 people could die over the next 15 years because they can’t afford to heat their homes.

 

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ScottishPower to cut gas prices by underwhelming 5.4% from March

 

ScottishPower has become the third large energy company from the ‘Big Six’ suppliers to announce household price cuts this year, these cuts are scheduled to reduce average annual bills by £32.

 

ScottishPower have announced they are to cut its standard gas prices by 5.4% from mid-March, saving a typical household £32 a year.

 

The Glasgow based company is the third of the ‘Big Six’ suppliers to announce a gas price reduction this year, after pressure from politicians to reflect the falling price of wholesale costs in a fairer tariff.

 

The reduction, which will affect about one million households on the supplier’s standard variable tariff, will not come into effect until March 15, meaning customers are still paying more during this colder winter weather.

 

Earlier this year E.On was the first to announce a 5.1% price, effective from February 1, this was subsequently followed by SSE, who announced they will slash their prices by 5.3% after Easter.

 

Stephen Murray, of MoneySuperMarket, said ScottishPower’s price cut was “hardly worth shouting about”. Murray stated “These price cuts are long overdue considering the sharp falls seen in wholesale gas prices over the last year, but they just don’t hit the mark.

 

“It will still leave these customers paying on average nearly £300 more than those who have shopped around and switched to one of the many fixed price deals already available.”

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