01.04.08 Second round of price rises likely

Last week Scottish and Southern Energy announced price rises of between 12% and 15%, the last of the big six providers to do so. It is almost 3 months since Npower raised its prices, with British Gas following suit less than two weeks later. Scottish and Southern have been true to their promise to freeze their prices for as long as possible and their customers can be thankful that they have reaped the benefit of cheaper tariffs during the coldest quarter of the year, a time when consumers use on average 40% of their annual gas and 30% of their annual electricity.

Consumers are, however, irked by the fact that shortly after announcing their price increases, energy providers also announced huge profits - in the case of British Gas these profits amounted to £571 million, a staggering six times more than last year. There is likely to be more bad news for consumers later in the year, with a second round of price hikes almost inevitable. Gas prices on the forward market for winter 2008 are 22% more than at present, an increase which is bound to be passed on, at least in part, to the consumer. The predicted rise of around 10% is likely to increase the average household energy bill to £1153, almost £250 more than at the start of this year.

Whilst the majority of us constantly check for better deals for our car insurance or mobile phones, it is a curious fact that far fewer of us bother to see whether we could get a better deal on our energy bills. The Switch with Which? service suggests that consumers should do a bit of research and see if there is money to be saved by changing provider, opting for paperless bills, paying by direct debit or choosing a dual fuel deal, where your gas and electricity come from the same provider.

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