Beat the energy price hikes

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EDF Energy has just announced another rate rise. Not content with the 2.7% price hike it announced back in April, the energy giant is now its putting prices up again, in what will be its second price hike this year.

The French-owned energy firm’s first 2.7% price increase put £16 on the average dual fuel bill, but customers will now have to stump up an additional £70 a year thanks to this latest 6% rise.

The changes will affect EDF Energy standard variable customers - which currently accounts for 40% of its customers – who will see prices go up from August 31. If you’re on a fixed price tariff, prepayment tariff or the safeguard tariff for vulnerable customers, you’ll not be affected.

Other recent rate rises include SSE, which finally cracked to become the last of the Big Six to increase its rates, Bulb Energy, an independent green energy supplier, and First Utility, the biggest supplier outside the Big Six, have both announced price hikes.

Bulb's Vari-Fair tariff, which is its standard and only variable rate tariff, went up by 5.1% for new customers from Monday, June 11, while existing customers - as well as those already in the process of switching to Bulb - will see the same price rise on Sunday, August 12.

Bulb has put the price rises down to increased wholesale costs, which have shot up by 21% since February, and estimates the average home will see their annual tariff increase from £879 to £923 - a rise of £4 per month, or £44 a year.

Around 450,000 customers will be affected.

First Utility has announced its First Variable tariff will increase by an average 5.9%, adding £5.58 a month - or £66.96 - onto a typical dual fuel bill. The new annual price will be £1,1991, up from £1,132 and will take effect from 23rd July 2018.

It puts the change in price down to a 9.2% increase in external costs over the past year, made up from a 9% increase in wholesale gas and electricity costs and a 30% increase in costs related to delivering government policies such renewable energy schemes.

Meanwhile, more than two million SSE Energy customers, including some whose energy is supplied under the M&S Energy brand, will see bills rise by an average of £76 a year - that's a 6.7% increase on the cost of a dual fuel bill.

Gas prices will jump 5.7 per cent while electricity will go up 7.7 per cent on July 11.

The start of May saw Npower announce a price rise of 5.3% - equal to a £64 a year increase onto the bills of a million dual fuel customers - to take effect on June 17.

This price hike followed shortly after Scottish Power announced it was to put prices up by 5.5% from June 1.

This means that all of the Big Six have decided to put prices up - and we don't like to say we told you so, but...

In April, British Gas announced it will be putting its prices up by 5.5%, signalling a £60 a year increase for anyone on its standard variable rate tariffs. The price hike will be applied from May 29, and comes less than a year after it pushed electricity prices up by 12.5%.

This latest increase will apply to both gas and electricity, and see its average annual standard variable dual-fuel bill go up to £1,161.

The government was quick to condemn the price rises as Energy minister, Claire Perry, said: "We are disappointed by British Gas's announcement of an unjustified price rise in its default tariff when customers are already paying more than they need to."

Unsurprisingly, Labour put the blame at the door of Number 10, suggesting the Prime Minister's hesitation to introduce a price cap has enabled the energy giant to push up prices.

Why are energy prices rising?

A new round of price rises was first mooted at the end of February, as a high gas demand for heating, coupled with a series disruptions to supply, meant National Grid had to issue a rare ‘gas deficit warning’ to urgently call for more supplies and ask industry to volunteer to use less.

This shortage in supply also brought with it the possibility that National Grid might even have to impose a compulsorily cut off of industrial users’ gas supplies, to help to preserve provisions for households.

It’s a situation that has seen wholesale gas prices peak at four times their usual level, surging as high as 225p per therm at the beginning of March, compared with an average of 56p per therm throughout February. And because much of the UK’s electricity supply is generated by gas-fired power plants, there’s also been a surge in wholesale electricity prices.

Suppliers are now under pressure to increase prices for consumers to help mitigate for this increase in wholesale costs, and this was one of the reasons given by British Gas, which was quick to point out Ofgem recently did the same when it announced five million vulnerable households would face a 5.5% price hike on their annual energy bills.

Mark Hodges, chief executive of Centrica Consumer, the domestic arm of British Gas’ parent company, said: "We fully understand that any price increase adds extra pressure on customers' household bills. This increase we are announcing today is reflective of the costs we are seeing which are beyond our control."

He added: "Government policies, intended to transform the energy system, are important but they are putting pressure on customers' bills. We believe government should level the playing field so the customers of all suppliers pay a fair share of energy policy costs," Mr Hodges said.

"We continue to encourage government to consider moving these costs out of energy bills altogether and into general taxation."

In short, it seems prices are going up through a combination of increased costs and the extra charges levied by the government, such as the smart meter roll out and emissions targets.

When will the energy price hikes kick in?

A number of energy companies have put their prices up since the turn of the year, with increases ranging from 2.5% to 10.7%, but the British Gas price increase is significant, and one energy supplier increases prices - particularly one of the Big Six - the others usually follow suit shortly after.

Don’t be surprised to see more suppliers putting up their prices during the coming months, mirroring the wave of price hikes imposed around this time last year.

It didn't take EDF long to blink - just two days after the British Gas announcement, the French-owned energy giant announced it would be putting 2.7% on the price of electricity as of June 7. The price of gas will remain unchanged.

EDF's price hikes will affect 1.3 million customers, and typical standard dual-fuel customers will see their bill rise by 1.4%, or £16 a year. And customers paying by cash or cheque, rather than by direct debit, will see their typical annual bill rise by £28 a year to £1,248.

Standard variable tariff price increases since December 2017

Supplier Old price New price Difference (£) Difference (%) Effective from
Our Power £848 £939 £91 10.7% April 2018
iSupply £1,014 £1,090 £76 7.5% March 2018
Good Energy £1,167 £1,249 £82 7.0% December 2017
Engie £980 £1,038 £58 5.9% April 2018
Pure Planet £860 £908 £48 5.6% March 2018
Ofgem Prepay Cap £1,031 £1,089 £57 5.6% April 2018
Ebico £1,101 £1,161 £60 5.5% January 2018
British Gas £1,101 £1,161 £60 5.5% May 2018
Ecotricity £1,201 £1,258 £58 4.8% April 2018
Igloo Energy £845 £871 £26 3.1% April 2018
Bulb £855 £878 £24 2.8% April 2018
Eon £1,123 £1,153 £30 2.7% April 2018
EDF £1,142 £1,158 £16 2.7% June 2018
Octopus £908 £931 £23 2.5% February 2018
Npower £1,116 £1,230 £64 5.3% June 2018
Scottish Power £1,210 £1,273 £63 5.5% June 2018
SSE £1,013 £1,089 £76 6.7% July 2018
Bulb £879 £923 £44 5.1% August 2018
First Utility £1,1991 £1,132 £66.96 5.9% July 2018
EDF £1,158 £1,228 £70 6.0% August 2018

How to avoid energy price hikes

Although the old saying goes that death and taxes are the only certainty in life, we may as well add energy price rises to the list, as prices go up without fail, year-on-year (admittedly, this would make the trope a lot less catchy, but still…)

The good news is there is an easy way to protect yourself from the annual price hikes, and that’s by signing up for a fixed rate tariff to lock in the price you pay for the energy you use.

Prices are usually fixed for between 12 and 18 months, and although your bills will still vary depending upon the amount of gas and electricity you use, the price you pay per unit of energy you use will remain the same for the duration of the deal, regardless of how much suppliers push their prices up by.

The freezing temperatures may have delayed any price hike announcements – putting prices up during a cold snap doesn’t make for great PR – as may have the ongoing parliamentary processes to introduce an energy price cap by next winter.

But it’s almost certain that prices will go up across the board in the coming weeks or months, so it makes sense to nail down your prices with a fixed-rate deal now.

Check out Everything you need to know about fixed rate energy tariffs for more information, and to see the best fixed rate deals on the market, or enter your postcode at the top of this page to run an energy comparison and see how much you could save on you annual bills.

How to switch energy provider

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