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Last Updated: Tuesday, 28 February 2006, 11:30 GMT
Powergen in big energy price rise
Gas hob
The price rise will add 107 to the annual average gas bill
Power company Powergen is putting up its gas prices by 24.4% and electricity prices by 18.4%.

The price increases, from 10 March, will affect about six million customers in the UK.

Powergen is the latest power supplier to announce big price increases in response to the rising wholesale price of gas.

The firm says that the wholesale price of gas has now gone up by 70% since January last year.

Powergen says the increases will add 107 to its average annual gas bill and 56 to its average annual electricity bill.

A company spokesman, Nick Horler, said: "We shielded our customers from the impact of these costs for as long as possible."

Biggest rise yet

Powergen is owned by the German power company E.ON.

Its decision follows similar increases from British Gas, EDF Energy, Scottish Power, Scottish & Southern and Npower.

Powergen: 24% gas, 18% electricity
British Gas: 22% gas, 22% electricity
Scottish & Southern: 14% gas, 12% electricity
Npower: 15% gas, 14% electricity
EDF Energy: 15% gas, 5% electricity
Scottish Power: 15% gas, 8% electricity

However, the increase in its gas charge is the single largest price yet to be imposed by a power utility in the UK.

It comes after Powergen put up its domestic gas prices last September, when they rose by 12% alongside a 7% rise for electricity customers.

Today's increase means that since January 2004, Powergen has imposed five price rises on its gas customers and four on its electricity customers.

Consumer watchdog Energywatch described Powergen's price hike as "appalling" and "further proof that the market is not delivering price protection for Britain's energy users."

And according to the regulator Ofgem, the average power bill across all suppliers in the UK - before taking today's Powergen increase into consideration - was 495 for gas and 327 for electricity, assuming that the bills were paid quarterly by cheque.

An Ofgem spokesman repeated its advice that millions of customers could still save money by switching suppliers: "Customers should switch and save, there are still savings to be made if you are prepared to shop around."

European probe

The European Commission, following complaints from Ofgem, is investigating why wholesale energy prices in the UK have risen so steeply.

It recently concluded that one factor was that big energy suppliers on the European mainland, many of which are national monopolies or semi-monopolies, have been holding back supplies of gas, thus driving up prices.

The EU competition authorities are now investigating individual companies to see what they have been up to and why.

The significance of the behaviour of European gas suppliers is that in the last couple of years, the UK has become a net importer of gas, as the country's own supplies from the North Sea have dwindled faster than originally expected.

The price of gas imported from Europe has also been driven higher by the rising cost of oil because on the continent, contracts for the supply of wholesale gas have traditionally been linked to oil prices.

British Gas raises prices by 22%
17 Feb 06 |  Business
Energy firms 'holding back gas'
16 Feb 06 |  Business
Power prices rise at EDF Energy
15 Feb 06 |  Business
Scottish Power ups energy prices
09 Feb 06 |  Business
Fuel poverty to increase in 2006
30 Jan 06 |  Business


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