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Last Updated: Thursday, 3 January 2008, 16:54 GMT
Npower to increase energy prices
Gas hob
Npower is increasing both gas and electricity prices
Npower is to increase both its gas and electricity prices, the UK's fourth largest energy supplier has confirmed.

The company, which has four million customers, said it would provide exact details on Friday.

Its move comes on the back of higher wholesale energy bills, lifted by crude oil hitting a record $100 a barrel in New York earlier this week.

Analysts predict that other UK energy providers are now likely to announce price rises.

'Difficult environment'

Npower, a subsidiary of German company RWE, has already increased its online tariff for new customers, raising that by 17% towards the end of last month.

The smart money is on a 15% rise
Tim Wolfenden of uSwitch.com

Meanwhile, British Gas parent Centrica also announced in December that it was increasing the price of its market tracker tariff, which mirrors movements in energy market prices.

British Gas went on to warn that rising wholesale prices meant the energy industry was facing a "difficult environment" in 2008.

"Price rises have been on the horizon for some time," said Tim Wolfenden, head of home services at uSwitch.com.

"Ever since British Gas and Npower announced price increases on their market trackers and Npower followed this up with a price hike on its online plan, it has been clear that prices are going to be heading north again, with the smart money on a 15% rise."

Passing on

Analysts say wholesale gas prices have risen on the back of the record cost of crude, as any increase in the price of oil has a knock on effect on gas.

Consumers are always being softened up with talk of 'unavoidable' price rises
Energywatch spokesman Karl Brookes

Wholesale gas prices in the UK are also said to have been driven higher by the growing number of energy firms on the continent turning to the more liberalised UK market for cheaper supplies.

UK household energy bills last rose strongly in 2006, with most suppliers increasing their bills on the back of higher wholesale prices.

However, prices then subsequently fell back during last year.

Independent consumer watchdog Energywatch condemned Npower's news.

"Consumers are always being softened up with talk of 'unavoidable' price rises," said Energywatch spokesman Karl Brookes.

"The wholesale price for gas has risen, it's true, but all suppliers can decide to absorb more of that themselves rather than pass all the rise on to consumers."

SEE ALSO
MP calls for cheaper fuel bills
27 Dec 07 |  Tayside and Central
Profits jump at British Gas firm
02 Aug 07 |  Business
Npower latest to cut fuel prices
19 Feb 07 |  Business
Npower announces third price rise
07 Sep 06 |  Business

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