Friday, 3 February 2017

UK: Government and Ofgem single out price increases of npower for criticism

Today the British energy regulator OFGEM and the British government have taken the unusual step of  publicly criticising the energy company npower. Earlier today npower announced that its averaged energy prices will  rise from 16 March onwards by 10 per cent, with a whopping 15 per cent increase in the price of electricity under npower´s standard tariff.



Npower, which was acquired in 2002 by the German company RWE, is one of the six big suppliers of electricity and gas in the UK. Npower blamed the prices on the wholesale market, but also legal obligations for the price increases.  https://www.npower.com/home/electricity-and-gas/price-change/?WT.ac=x000x1489  The company referred to three legal obligations in particular (increasing share of renewables, phasing in of smart meters and the creation of a capacity mechanism in the UK), which would leave it with no choice, but to increase prices.

The British energy regulator Ofgem said it would take a very close look at the price-increases, adding that npower must duly justify these increases to its customers. According to the BBC, an Ofgem spokesperson added that Ofgem does not see a case for stark price increases, given that suppliers could easily avoid consumer price rises by buying energy at forward prices http://www.bbc.co.uk/news/business-38852517  The rise in electricity prices is thought to be the largest since 2008.

Remarkably, the UK government itself joined the criticism, saying that it was concerned by npower´s plans. It is quite an unusual step for a government to comment on price increases of energy suppliers, let alone singling out one particular company for criticism.

According to the Guardian, npower is actually the second of the six companies to move. In December 2016 EDF Energy announced an increase in its prices, although at a much more modest level, with an increase of 1.2 per cent in its dual fuel tariff https://www.theguardian.com/business/2017/feb/03/npower-electricity-gas-price-rises-dual-fuel-bills  Today`s move of npower is likely to instigate similar moves by the remaining big energy supply companies in the UK.

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