Households hit by big energy price rise

Households hit by big energy price rise

Millions of households face big increases in energy bills after one of Britain's biggest gas and electricity providers said yesterday it was raising prices for the second time this year, with other suppliers expected to follow suit in the coming weeks.

EDF Energy, which has just over 5 million residential and small business customers, said it was increasing the price of gas by 22% and electricity by 17%, with immediate effect. This would mean that bills for customers taking both fuels would rise by £200 a year on average.

Dual fuel bills have risen to an average of more than £1,000 a year after the last round of price increases and there have been warnings that prices could rise by 40% this year. Though the other energy suppliers declined to comment or said they were monitoring developments, industry analysts believe EDF is simply the first to move.

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uSwitch.com, a price comparison and service switching provider, said a 40% rise would take the average dual fuel bill to £1,467 a year, accounting for 5% of the average household's net income. "It will mean an unprecedented £555 increase in average household bills in one year."

Ann Robinson, uSwitch's director of consumer policy, said: "Other suppliers are suffering too and are sure to follow suit over the next weeks or months.

"The days of cheap energy are over ... We are in danger of seeing household energy becoming unaffordable for growing swaths of society."

The increase brought a stark warning from Age Concern. The charity's director general, Gordon Lishman, said: "News of yet more huge hikes in energy prices will horrify many pensioners who are already struggling to pay their rapidly rising household bills. It is an absolute disgrace that over 2.25 million older people are now living in fuel poverty, with thousands more facing the same fate."

The help offered by the government and the energy companies to those most in need was "woefully inadequate", he said, calling for emergency help as well as longer term assistance.

EDF said it had to raise prices because of the cost of wholesale energy, which has been driven higher by the soaring oil price. It said wholesale gas prices had risen 63% since it raised its charges to residential users in January, while wholesale electricity was up 47%. Eva Eisenschimmel, chief operating officer of its customers branch, said: "We have been absorbing some of these costs in recent months, but we now have to pass on some of the resulting rise in wholesale costs to our customers."

This week Ian Marchant, chief executive of Scottish and Southern Energy, Britain's second biggest supplier behind British Gas, said it was more difficult by the day to resist further increases.

Joe Malonowski, at TheEnergyShop.com, said the EDF increase was not enough to correct the imbalance between wholesale and retail prices and a second increase could be on the way this winter. However, the oil price has retreated from the records set earlier this year and a second increase "might not have to be that big".

· This article was amended on Tuesday July 29 2008. Gordon Lishman is director general of Age Concern, rather than Help the Aged as we said in the article above. This has been corrected.

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