Big Six energy supplier Npower is to increase standard variable energy tariffs by 5.3% in a hike affecting approximately one million customers.
The company, owned by Germany’s Innogy, blamed rising wholesale energy prices and the costs of implementing government policy as it announced the hike, which will come into effect on 17 June.
Npower said that more than 60% of its customers – such as those on fixed tariffs or using prepayment meters – would not be affected by the change.
It follows a series of hikes announced by Big Six rivals British Gas, EDF and Scottish Power and the scrapping of a customer discount by E.On that will also effectively mean higher bills.
The Npower price increase will observe a standard dual fuel gas and electricity annual bill increase by £64 to £1,230. The increase is made up of a 4.4% increase in gas and 6.2% increase in the prices of electricity.
The price hikes come as Big Six energy companies experience sustained political pressure regarding the issue that customers are paying too much, which has urged plans by the government to impose a cap on the standard tariffs.
The managing director for domestic markets of Npower, Simon Stacey, stated: “Announcing this price change today isn’t a decision we’ve taken lightly.
“The costs all large and medium energy suppliers are facing – particularly wholesale and policy costs which are largely outside our control – have unfortunately been on the rise for some time and we need to reflect these in our prices.”
Last November, Innogy, the owner of Npower, agreed on a deal with SS, a Big Six rival, for the two companies to demerge their supply arms in the United Kingdom so that they could join forces to produce a new player.
The deal would reduce the Big Six to five. It is being examined by the Competition and Markets Authority (CMA), which referred it for an in-depth inquiry which will release a report in October 2018.
After an initial inquiry, the CMA had discovered that the tie-up could reduce competition, possibly leading to higher prices and that the firms had not presented measures to address the concerns.
A merger between the supply arm of SSE and Npower would consolidate the position of SSE as number two in the market to British Gas, with a combined customer base of over 11 million and revenues amounting to £11bn.
Last March, a deal was announced in Germany. The said deal will see the current ownership pass of Npower to E.On. It has added complication due to the possibility that it could further narrow the market.
The CMA has said that it would engage with the firms to consider the implications, even though Innogy has said that it does not expect the deal to have a “material impact” on the merger between Npower and SSE.