The supplier blamed the increase on rising wholesale energy prices and the growing cost of government policies such as the smart meter rollout and the Capacity Market. It said the trend is set to continue as network and policy costs come to make up an increasing share of energy bills.
The price hike is made up of an average bill rise of 4.8 per cent for gas and 15 per cent for electricity. It includes a £55 increase to the standing charge for electricity, which Npower said would bring it “in-line with the rest of the market”.
The new charges will come into effect on 16 March and will affect roughly half of its 2.8 million customers. They will not hit vulnerable customers until May and pre-payments customers will be unaffected. The supplier last raised its standard variable tariff in October 2013.
“This is a hugely difficult decision, and we’ve delayed the date this takes effect until after the coldest months of the year,” said Npower managing director of domestic market Simon Stacey.
The supplier also launched a new four-year fixed deal for existing customers with a 4.8 per cent discount and no exit fee, saying it wanted to “encourage even more engagement” and get customers off its standard variable tariff.
Responding the announcement, Citizens Advice chief executive Gillian Guy said price rises should only be considered as a “last resort”.
“To help customers know what they are paying for and compare supplier, energy firms should be clear and up front what is causing bills to go up,” she added. “Energy bills can be a big pressure on household finances and the government has been right to bring this into focus in recent months.”
MoneySuperMarket energy expert Stephen Murray said: “Coming off the back of EDF’s price increase that starts on 1st March, further price increases from the big six had a certain air of inevitability. However, this hefty rise of nearly 10 per cent will add £109 for the average dual fuel customer – a significant dent to customers’ wallets.”
Npower’s Stacey recently also evidence at a hearing held by the business, energy and industrial strategy select committee earlier this week. The session focussed on energy market pricing and competition and Stacey told MPs that criticism of suppliers for percieved profiteering at the expense of customers on standard tariffs is unreasonable.
“We need to recognise that energy businesses need to make a return,” he said.