Energy bills set to soar in 2008

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With one of the UK's largest suppliers of gas and electricity, Npower, announcing it will be increasing costs to the customer by up to 17%, it's only a matter of time before others follow suit.

The change in prices means the average annual household bill will increase by £64 for electricity and £95 for gas, across all payment methods.

Analysts have been warning for some time that householders' energy bills may soar by up to a fifth this year, as suppliers pass on a rise in wholesale gas prices.

Russian firm Gazprom, which is responsible for supplying a quarter of Europe's gas, said that it expects suppliers to raise charges by February 2008.

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Prices rises across the board

Karen Darby from SimplySwitch, the price comparison and switching service, comments: "Wholesale prices have been creeping up for some time now and several analysts are predicting gas bills will rise by at least 15 percent. However, it's not just gas bills that are likely to soar."

With 40% of the UK's electricity generated by burning gas, a rise in wholesale gas prices means that electricity bills will rise too.

Over the past year, wholesale gas prices have fallen by half, with wholesale electricity costs down by almost a third.

Despite some highly-publicised price reductions, the major suppliers have only brought average bills down by around 15 to 20 percent. If energy prices rise as much as analysts are predicting, customers could be forced to pay an extra £131 per year in energy bills.

It's already been estimated that an energy price hike of just 10 percent would push 400,000 more households into fuel poverty. A rise of 15 to 20 percent would have an even more devastating effect, and more needs to be done to protect vulnerable households.

Luckily, for those wishing to protect themselves from rising bills, there are some highly competitive capped deals available at present. In the past, capped deals were expensive, with customers paying way over the odds for their added peace of mind.

Now, however, some capped tariffs are nearly as cheap as the UK's best non-capped deals and charge no penalties if the customer wishes to leave.

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