Co-op Energy has become the second small supplier to raise prices as wholesale energy costs surge.

Today (26 Aug) the energy firm announced an average 3% price rise in their variable 'Pioneer' tariff. The increase means that new and existing customers on this deal will see their prices jump by an average of £32/yr, to £1,121 based typical usage, from 1 October.

The increase comes hard on the heels of an announcement earlier this week from Ovo Energy, which said that it would be increasing the price of its 'Better Energy' one-year fix tariff by 3.6%.

The Ovo price rise, which took effect the same day as the announcement, will see the cost of the tariff jump from £886 on typical usage to £917. Ovo says the price change is due to an increase of 8% in wholesale prices for both gas and electricity since June, while Co-op Energy blamed rising environmental costs as well as wholesale markets.

Last month we warned that many of the cheapest deals were starting to disappear – back in May, someone with typical usage could get a one-year fix for just £724. Today, the cheapest one-year fix going will cost £770/yr.

Rising costs of energy to blame

Wholesale prices – what energy providers pay for gas and electricity in the markets – have risen steeply since the beginning of April, and the weakened pound since Brexit has meant it costs more to import. There are also ongoing concerns of a gas shortage as one of the largest UK gas storage facilities was forced to shut down last month.

Archna Luthra, Head of our MSE Cheap Energy Club, says: "Suppliers are blaming sharp increases in wholesale energy prices for the increase in prices. A few of the smaller providers which are more sensitive to whole sales prices have hiked costs but it's still to be seen if the big six will follow suit.

"The key message for everyone though is you can likely save – if you're on a standard tariff with one of the big six, you could save up around £300/yr by switching more for some."

She adds: "In the next few weeks we will be launching our fifth Big Switch. This is where we use the power of Energy Club members and recipients of our weekly email to negotiate cheap deals with energy suppliers. In our previous collectives, we've bagged deals that we're cheaper than cheapest tariffs available on the market. Rules from the regulator mean you have to sign up by 8pm on 12 September if you want to take part."

Save £100s on your energy bills

Don't wait to see what other providers do; if you've never switched before or have been on your energy provider's standard tariff for years, you can likely save immediately. Check if you can save £100s on your energy bills by:

  • Doing a comparison via our Cheap Energy Club, and if we can switch you we'll give you £30 duel fuel cashback (£15 single fuel).
  • Use our top picks comparison to get full reviews of leading tariffs and help about which firm and deal to choose.
  • If you don't want switch, check to see if you can save by moving to your supplier's cheapest tariff.
  • Register for our Big Switch Event 5 by becoming a Cheap Energy Club member or signing up to our weekly email for the before 12 September for a chance to beat the cheapest gas and electricity deals.