Npower becomes third big six supplier to hike bills after Ofgem's price cap rise
Npower has become the third big six supplier to increase its energy prices to the maximum allowed under the new cap on standard variable tariffs (SVTs) – hitting customers with an average 10.3% price rise from Monday 1 April.
The £117/year price hike comes just six days after regulator Ofgem announced it was increasing the level of the price cap on standard and default energy tariffs from Monday 1 April. E.on and EDF both announced they would be raising their prices earlier this week.
Just over a million Npower customers will be affected by the rise, which will mean a £117/year increase to £1,254/year for a household with typical use. Yet this ISN'T the maximum anyone will pay, as the price cap places a maximum charge on the rate you pay for gas and electricity – use more and you'll pay more, use less and your cap will be lower.
MoneySavingExpert.com founder Martin Lewis, commenting last week on Ofgem's hike, predicted that "most of the big six providers [will] snuggle their prices right against the cap".
He said it would "feel like a damp squib to most people", as the new level was actually £34 MORE than firms were charging in December, before the cap launched.
Why are prices rising?
The energy price cap limits the amount suppliers can charge for each unit of gas and electricity, and sets a maximum daily standing charge (what you pay simply to have your home connected to the grid).
It's reviewed twice a year, in April and October, and last week Ofgem announced it would be raising the price cap for households with typical use (NOT the maximum householders can be charged) from £1,137/year to £1,254/year.
It's blamed the increase on higher wholesale energy costs caused by rising oil prices, as well as factors such as green energy schemes and higher demand during the 'Beast from the East' last year.
What can I do?
With half of the big six suppliers already confirming they're upping their standard tariff rates, and others likely to follow, the best way to save on your energy is to switch provider.
If you're on a standard or default tariff, you're free to switch away at any time. Suppliers can't charge you exit fees if you're on this type of tariff – and savings of well over £250/year are possible.
You can use our Cheap Energy Club to compare the whole of the market.
What does Npower say?
An Npower spokesperson said: "Ofgem has increased the level of the SVT price cap by £117 in response to increased costs being faced by the industry.
"Therefore, Npower will be mirroring the full level of the increase in our own SVT rate from 1 April."