Last week it emerged in the news that Npower plans to raise its gas and electricity prices by 9.8% by May this year. Whilst this hike is set to affect domestic energy customers, there are concerns that business contracts will follow suit.
Skyrocketing electricity prices
The 9.8% rise applies to a dual fuel bill, which would see customers paying an increase of £109 annually. However, individual utility increases are looking to be 4.8% and 15% for gas and electricity respectively. This has caused concern for customers, Ofgem and even the government, as it looks to be the largest rise in electricity price since 2008.
Wholesale cost increase
One of the main reasons Npower has given for the impending price hikes is the significant increase in wholesale energy costs. They cited this, along with the cost of delivering government policies such as smart meter installation and renewables obligations as the main factors in upping consumer prices.
However, it’s the increase in wholesale cost which we believe is most important – as the wholesale cost of electricity has shot up by 36% since April 2016.
We believe that as the wholesale cost of electricity has increased dramatically over the last year, it won’t just be domestic customers affected by this. With an increase in wholesale cost of over a third, it’s not just Npower that will look to pass on some of this increase to customers. We believe that the rest of the big 6 will follow suit, and that business customers will see even the best electricity and gas tariffs increase.
As most energy suppliers buy gas and electricity up to two years in advance, it’s unclear whether business consumers will be affected by this right away or further down the line. This is the main criticism of Npowers increase, put forward by Ofgem.
The one silver lining is that those already locked into a fixed term contract will remain unaffected until this comes to an end. For those whose contract is about to come to a close, or who may no longer be on a fixed term contract, it could be a different story. We can have a chat with you from around a year of contract expiry. With over 20 years’ experience in the industry, Business Cost Consultants can help with this. It’s our job to negotiate the best possible deal for our utilities customers, and to ensure they continue to save costs in the long term.
If you think you could be affected by this price hike, or would like some more information on how we can negotiate the best energy and gas supply deal for you, please get in touch or call us on 0141 226 8525