Npower to increase standard energy prices from March

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NPOWER have announced they'll be increasing what they charge for gas and electricity from March 16th, when dual-fuel customers on standard variable tariffs (SVTs) will have to pay 9.8% more (or £109 a year) on average.

The rise is one of the largest introduced by a Big Six energy provider in recent years, although npower state that it will be the first time they've pushed up their prices in three years.

Added to this, they also note that vulnerable customers won't see any increase until May, while 50% of their customers won't see any increase as a result of being on fixed tariffs.

And yet, the announcement of this rise comes at a time when Ofgem have not only warned suppliers to do more to help disengaged customers get a better deal, but have also argued that they have no excuse for increasing prices.

Increases all round

Npower have argued otherwise, claiming that the hike was necessary after "increases in wholesale energy costs and rises in the cost of delivering Government policies".

Wholesale costs did undoubtedly rise over the course of 2016, yet according to Ofgem this still doesn't provide npower and other providers with justification for imposing extra costs on their customers.

Their Chief Executive, Dermot Nolan, said last month, "It's not obvious that there should be significant price increases across the market."

His line of reasoning was that, because suppliers generally buy energy up to 18 months in advance, they aren't particularly affected by more recent rises in the wholesale cost of electricity and gas.

Still, as we've written before, bills almost always rise in line with wholesale costs, something which ultimately makes it unsurprising that npower have gone ahead and increased their electricity prices by 15% and their gas charges by 4.8%.

In doing this, they'll be joining EDF, who'll increase electricity (but not gas) prices by 8.4% from March 1st.

It's also likely they'll joined by British Gas, E.On and SSE, since even those three committed to a price freeze until the end of March, such a freeze inevitably suggests that bills will go up afterwards.

How to get customers to switch

Despite such increases, npower aren't perhaps as affected by Ofgem's other criticism as their rivals.

Even though the Big Six as a whole may be guilty of not doing enough to prod their customers into taking the cheapest possible deal, npower claim they have "a higher percentage of fixed-rate tariff customers than most large suppliers".

In fact, 50% of their customers are on fixed tariffs, which won't be touched by the price rise.

What's more, npower will be contacting those existing SVT customers confronted with a 9.8% rise and offering them a four-year fixed tariff that's 4.8% cheaper than the new SVT.

We're already delaying the impact of the increase for vulnerable customers, but anyone who is struggling with their energy bills should contact us straight away to discuss whether they're on the right tariff for their needs, energy saving help and bespoke payment plans.
Simon Stacey, npower

A four-year deal may be longer than some customers would prefer, yet the possibility of being encouraged to switch to it shows how npower have made considerable progress in terms of customer service since their record £26 million fine in 2015 for billing and complaints issues.

Plus, the tariff comes with no exit fees, allowing customers to switch at any time if they find a better deal.

Speaking of the possibility of switching, npower's Simon Stacey said, "one million of our customers switched to another of our tariffs last year ... To encourage even more engagement, today we're launching a fixed tariff just for our existing customers who are still on an SVT, that will fix energy prices for the next four years with no exit fees".

In light of such comments, it would appear that today's steep price rise isn't intended only as a simple, cost-covering price rise. Instead, it appears to be designed as a goad to get npower's customers to switch, and in particular to switch to a four-year fixed tariff with them.

Vulnerable customers

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However, as crafty as this might seem, npower are introducing various protections for their more vulnerable customers.

For one, those on prepayment meters won't be seeing any price rise whatsoever. And as for vulnerable customers on normal SVTs, npower have affirmed that they "won't see any impact until May".

Admittedly, this use of the term "any impact" can be a bit ambiguous, insofar as "any" could be taken to suggest that vulnerable customers on SVTs might in fact see less than a 9.8% rise in their bills come May.

We asked npower directly for an explanation of what exactly it means, and were told by a spokesperson that the "any" refers to how there are regional variations to all price increases, owing to how network and distribution costs differ throughout the country.

What this means is that someone in the north of England may receive a smaller price increase than a customer in the south. As such, the "impact" of npower's price rise for them will be smaller.

Also, with regards to the question of who exactly counts as "vulnerable," npower cleared up this ambiguity by informing us that those who receive the Warm Home Discount fall into such a bracket, and so too do their Macmillan Fund customers.

Accordingly, these customers will be protected from any rise for two months after March 16th, and even if they're not entirely happy that this grace period doesn't last longer, npower themselves already appear to be advising them on what they can and probably should do: switch tariff.

Will you be particularly affected by the npower price rise, or by rises from any other energy provider? Let us know what you think of them by leaving your comments below.