Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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Customers This week Supplier blames rises on climbing wholesale and distribution prices, and government rules Npower joins SSE and BG and hikes prices Npower is the latest energy company to announce winter price rises. It will increase electricity prices by 9.3 per cent and gas prices by 11.1 per cent from 1 December. It said the main reasons behind the price rise were increases in distribution charges, Gas generation: rising input costs to blame the cost of meeting government obligations and increasing wholesale prices. Chief executive Paul Massara said: "I know increases to household bills are always unwelcome, and this is not a decision we have taken lightly. We will continue to take steps where we can to reduce the impact of the external influences on energy bills. "We only aim to make around 5 pence in every pound (5 per cent) in our retail business." Massara also attacked Labour's proposed price freeze, saying it would not lead to lower prices "because it doesn't cut the growing costs of supplying energy". He added that "imposing price controls discourages investment, increases uncertainty and ultimately leads to higher prices". British Gas and SSE have announced similar rises, and Co-operative Energy plans to increase electricity and gas prices by an average of 4.5 per cent. Npower also announced that it would be simplifying its gas standing charges by removing regional variations and introducing a single national equivalent. The new gas standing charge will fall from an average of £146 to £100, although this reduction will be balanced by an increase in unit rates. MB Energy Six-fold increase in tariff switching The number of energy customers who have switched their energy tariffs has increased by 570 per cent, according to Uswitch.com. The price comparison website told Utility Week there had been a near six-fold increase in the number of households that had switched in the fortnight since British Gas and SSE announced price rises. Of the switches that have been made since SSE announced its 8 per cent price rise two week ago, 91 per cent transferred to fixed price deals. A spokesperson for Uswitch. com said: "We're seeing a lot of people who are coming off standard tariffs, so that suggests they are people who have never switched or switched a long time ago… the fact that we're seeing more of them coming off standard and moving into fixed price tariffs suggests the message is starting to get through." ENERGY Heat networks plan protection scheme District heating industry players and consumer bodies have set out proposals for a self-regulation scheme to protect customers, due to launch next year. Heat networks create local monopolies, as with electricity and gas distribution, but they are not regulated in the same way. The Independent Heat Customer Protection Scheme establishes standards of protection and a service for settling disputes between customers and heat providers. This was identified in the Department of Energy and Climate Change (Decc) heat strategy as a "practical step" to help develop the market. District heating serves 2 per cent of customers. According to Decc models, this could grow to 14-20 per cent in 2030. ENERGY Co-op splits price rise with customers Co-op Energy will increase its energy prices by an average of 4.5 per cent, but says it is sharing the burden of increasing costs by limiting the increase. The average dual fuel increase for customers on Co-op Energy's Pioneer tariff will be £57.36 per year, bringing the typical bill up to £1,315 per year. The new tariff will affect new customers from 21 October, but existing customers will not be affected until 8 January 2014. The increase represents half of the increase in wholesale costs. Ramsay Dunning, general manager of Co-op Energy, said: "To demonstrate our commitment to our customers we have decided to effectively go halves on the costs." I am the customer Zoe McLeod "Disappointing" is one word to describe Decc's response this week to the Energy and Climate Change Committee's report on the smart meter rollout. "Expensive" could be another. In its report, the committee says it's "not convinced by the argument that competition in the market will ensure that costs are kept down and benefits are passed on to consumers" and proposes that suppliers work together to achieve efficiency savings. But Decc believes that "To dismiss the proposal is potentially costly to us all" because "they are in competition with each other, suppliers are motivated to deliver the rollout in the most efficient way." While this might be the case in some circumstances, the delivery of this major infrastructure project isn't one of them. The Energy Retail Association is on record as saying: "It 26 | 25th -31st October 2013 | UTILITY WEEK is difficult to envisage how suppliers alone could lead any form of co-ordination under what is fundamentally a competitive meter installation approach." We have yet to see Decc's evidence that a competitive rollout will deliver. Consumer Futures believes the government should properly consider the committee's proposal for a co-operation protocol and mandate community-based trials involving at least the big six, which assess the cost- effectiveness of greater coordination. To just dismiss the proposal as Decc seems to do, without due consideration and appropriate evidence, is not only irresponsible but potentially costly to us all. Zoe McLeod, head of smart and sustainable energy markets, Consumer Futures