Powergen ups energy bills for second time

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The Independent Online

Powergen became the latest electricity and gas supplier yesterday to impose a double-digit rise on its consumers, days after its German parent company E.ON announced a jump in profits.

The energy provider will add 10 per cent to electricity prices and 18 per cent to gas. The move will take an average Powergen gas bill to £644 and electricity to £392. The company has added £288 in 2006 so far to the annual bill of a customer taking both electricity and gas. Its gas prices have risen by £333 or 108 per cent since 2003, with electricity up by £151 or 62 per cent in that time.

It was the second price rise from Powergen this year, though the company pointed out that it was the last of the six major suppliers to put through a second increase in 2006. In March, Powergen - which has 8.5 million customer accounts in the UK - lifted the price of gas by 24 per cent and electricity by 18 per cent.

After the latest rise, only British Gas, at £1,120, is more expensive than Powergen, at £1,006, for the average dual-fuel customer. The cheapest is npower at £880, according to uSwitch, the organisation that advises consumers on utility suppliers.

Adam Scorer, the director of campaigns at the consumer group energywatch, said: "The energy market is stuck in a high-price rut. That means millions in fuel poverty, bigger bills for everyone, inflationary pressures and higher interest rates.

He added: "After 10 years of competition, it is high time to review whether consolidation and vertical integration is a model of competition that benefits consumers."

Powergen attributed the move to the rise in wholesale energy costs, which it said had gone up by 87 per cent for both electricity and gas since the beginning of last year. As a result, its parent E.ON earlier this week announced that UK profits for the first half of the year dropped by 26 per cent, from €613m (£417m) to €451m. However, it admitted wholesale energy prices in the UK were falling. And overall group profits for the Dusseldorf-based E.ON rose 13 per cent to €4.84bn.

Ann Robinson, the director of consumer policy at uSwitch, said: "This is another case of 'one story for the shareholders and another for the customers'. On the one hand, investors are being told that profits should improve because wholesale costs are falling. At the same time, customers are being told that their bills are having to go up because of soaring wholesale prices. The only truth that customers can be sure of is that their bills are rising again."

According to uSwitch, the latest round of price rises by the "Big 6" energy suppliers is set to cause misery for more than 325,000 UK households by plunging them into fuel poverty. This would take the number of households in fuel poverty in the UK to more than 3 million.