Households face 15 per cent rise in their energy bills

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The Independent Online

Households will face substantial rises in gas and electricity bills this winter after Britain's second biggest power company confirmed it was to saddle its customers with the cost of escalating wholesale prices.

The average energy bill is expected to top 1,000 a year when npower reveals the full scale of its price hike later today. Some estimates suggest the German-owned company's 6.8 million customers face increases of about 15 per cent 16 per cent for gas and 14 per cent on electricity.

Npower's move is almost certain to trigger the five other leading UK suppliers to follow suit and signals a bleak winter for the four million Britons struggling to pay their power bills.

Consumer groups warned that the latest rises come on the back of an overall 90 per cent increase in gas bills since 2003 and a 66 per cent growth in household electricity costs, negating a series of cuts announced earlier this year.

The industry blames the rise on the soaring cost of oil, which hit $100 (51) a barrel this week. Analysts complained that British consumers were once again being penalised by continental European traders who buy UK energy cheaply and sell it back at inflated prices.

Adam Scorer, of the consumer watchdog Energywatch, blamed the latest rises on the continuing failure to liberalise mainland Europe's energy markets coupled with the reluctance of the big six UK suppliers to absorb cost increases. This meant misery for the millions of vulnerable people currently spending more than 10 per cent of their household income on fuel, Mr Scorer said. "The consequence is that consumers households, businesses, public services all have to find extra money from tight budgets to pay for essential gas and electricity".

Tim Wolfenden, head of home services at the price comparison website uSwitch.com, said npower's decision would "give competitors the green light" to raise their tariffs.

"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 per cent rise," he said.

British consumers have been more vulnerable to international volatility on energy markets since North Sea production began to fall below national requirements, forcing growing dependence on imports.

Gordon Brown indicated last week that energy security would be one of the priorities for his premiership. Campaigners say the UK enjoys the most liberal market in Europe, though the big six suppliers tend to act in unison when wholesale prices rise.

Meanwhile, other countries are stubbornly refusing to free up their wholesale markets, giving the vast energy companies that dominate a virtual stranglehold over the British consumer.

The inter-connector pipeline linking Britain to Belgium had been exporting gas to the Continent since Christmas Eve. As winter started to bite in the UK, gas has started to flow the other way, and with European prices indexed to oil this has brought pain for British households.

Npower, which is owned by the German company RWE, said last night that its wholesale costs had increased by 60 per cent over the past 12 months.

British Gas's parent company Centrica warned last month that wholesale prices meant a "difficult environment" in 2008, signalling that prices were set to rise across the board.

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