Npower raises price of energy for six million

Household gas and electricity bills will increase by an average of five per cent from January 4, which will amount to an increase of 54 on the average annual dual-fuel energy bill.

Npower is the fourth of the "big six" energy suppliers to raise prices in recent weeks, following hikes from Scottish & Southern Energy, British Gas and Scottish Power.

Npower said higher network charges, new environmental obligations and an increase of 50 per cent in wholesale prices had forced it to lift bills.

But the company vowed to freeze its social tariff, applied to the firm's most vulnerable customers, such as the poorest pensioners, until April next year.

Kevin Miles, chief executive of npower retail, said customers could offset increases in bills by changing the way they pay, improving energy efficiency in their homes and taking regular meter readings.

He said: "When wholesale costs are driving prices up it's a good time to review the way you manage your energy.

"Making the right choices can help to offset any increase in the bill."

Industry watchdog Ofgem recently revealed plans to investigate the UK's energy giants after it emerged that recent price hikes have seen suppliers' profit margins soar by 38 per cent.

Ofgem announced the probe after discovering average margins on a standard dual-fuel tariff had risen to 90, compared with 65 in September.

Ofgem said it would look at the "facts behind the numbers" as companies claimed rising prices in the wholesale market – where suppliers buy their energy – left them with no choice but to lift bills.

EDF Energy is the only "big six" supplier to have guaranteed to freeze standard gas and electricity prices for residential customers at current levels until at least March 2011, while E.ON is yet to make its pricing position known.

Audrey Gallacher, head of energy at Consumer Focus, said: "More bad news for consumers. Npower customers will have been bracing themselves for this bad news after the increases from other firms, but that won't make them any less worried about affording their bills this winter.

"With four of the Big Six suppliers having now announced price rises averaging six per cent, the focus on Ofgem's review of whether energy prices are justified will be even sharper.

"Millions of the poorest households living in fuel poverty should focus the Government's minds on how to make the Green Deal a "game changer" for fuel poverty as well as energy efficiency."

Meanwhile, the price of petrol at the pumps has soared to a record high, the AA said yesterday.

The average price is now 121.76p a litre, overtaking the previous record figure of 121.61p reached on May 12 this year.

Average diesel prices are now 125.73p a litre, still short of the July 2008 record of 133.25p. Petrol is now 11.88p more expensive than it was at the beginning of this year, with motorists having to pay almost 6 more to fill an average tank. The extra monthly cost of petrol for a two-car family is 25.23, compared with the start of this year.