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Last Updated: Thursday, 7 September 2006, 16:53 GMT 17:53 UK
Npower announces third price rise
Gas ring
Npower said it was the last of the major suppliers to raise prices
Energy company Npower has announced its third price increase for domestic customers so far this year.

Its six million customers will face a 17.2% rise in their gas bills while electricity prices will go up 9.9% from 1 October.

Rising wholesale energy prices, which it said had jumped 250% since 2003 and 60% in the past year, were blamed.

The new charges will lead to an average increase of 92 a year for gas users and 36 for electricity customers.

Npower, which is owned by German utility group RWE, first raised its prices for customers in January, then again in March.

'Competitive rates'

Npower said it had been forced to take action after freezing prices during 2005.

"Despite today's announcement, we remain very competitive," said Kevin Miles, managing director of Npower residential.

"Our average dual fuel bills are still 91 cheaper per year than British Gas."

I can categorically say there will be no more price increases before the end of the year
Npower spokesman

The news comes just days after the latest price rise from rival British Gas came into effect.

"We are the last of the major energy suppliers to raise our prices," Mr Miles added.

"Npower customers pay lower prices for longer.

"We're protecting our customers from the full impact of the increases in wholesale energy costs."

The group added it would be extending its "gas guardian" tariff, which freezes prices at the level charged by British Gas before the latest round of price rises, until 2008.

'Relentless hikes'

Despite such assurances, consumer watchdog Energywatch attacked what it called the "relentless price hikes" by energy companies.

"Npower tells us that it is struggling to maintain its profits as an energy supplier in the UK, and that it has been forced into raising prices for its customers again," said Energywatch chief Allan Asher.

"But its electricity generation business is doing well, as the price of electricity has risen so dramatically and its parent company (RWE) is doing even better."

Mr Asher added that the price rises showed competition in the utility market was not working, and urged policymakers to examine "what has gone wrong with the UK model".

Cost squeeze

All of Britain's energy suppliers have raised prices sharply this year on the back of surging wholesale gas prices.

The cost squeeze has led experts to predict that utility firms may bring in another round of price increases before the end of the year.

However, an Npower spokesman said the company had no plans to raise prices again this year.

"I can categorically say there will be no more price increases before the end of the year. That is an absolute promise," he added.

The price of wholesale gas in the UK has been increasing as the country's stocks in the North Sea have declined, forcing more to be imported from Europe.

Wholesale gas and energy prices have also risen in line with the high cost of oil, which has increased because of political instability in the Middle East and strong global demand led by fast-growing economies such as China.

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