Here’s our roundup of the top energy, broadband, and mobile news from the past week:
Npower Becomes Latest Energy Supplier To Announce Price Rises
Npower has announced they will be raising the price of gas and electricity by 10% for their customers on standard variable tariffs.
The price hikes will add an average of £117 a year on customers’ bills from April 1, affecting around 1 million customers. Npower is the third Big Six energy supplier to announce price will rise in April following earlier announcements this week from E.ON and EDF Energy.
The price hikes come after Ofgem announced that they would be raising the energy price cap by 10.3% in April. The price cap only came into effect on January 1, following pressure from the government to stop the energy companies ‘ripping off’ vulnerable customers. The regulator has claimed the increase in the cap is necessary following rises in the wholesale price of gas and electricity, as well as increased transportation and environmental costs.
A spokesperson for npower said: “Ofgem has increased the level of the SVT price cap by 117 pounds in response to increased costs being faced by the industry. Therefore npower will be mirroring the full level of the increase in our own SVT from April 1.”
Sky Expected To Raise Prices In April
The exact size of the annual rise will be confirmed by the provider next week. It is expected that the average broadband customer on a standard rental charge will see a rise of £1 to £1.50 a month, or 3-5%. Sky TV customers are also likely to see prices rise. All Sky customers experienced a similar price rise around the same time last year.
However, the regulator Ofcom have put rules in place that protect customers from mid-contract price hikes. Any current Sky customers will be able to leave their contract without incurring an exit fee, as long as they leave within 30 days of receiving official confirmation from the company.
There are several reasons for the broadband and TV provider’s annual price hikes. They usually make a lot of changes to their services each year, such as adding new content and developing new systems, which inevitably cost money. Demand for their services is also growing as customers use up more and more data every year.
Customers who are currently out of contract are free to compare prices and switch to a new deal today, although all the other major broadband providers are also expected to announce similar price rises.
Lower Energy Costs Cause Inflation To Hit Two-Year Low
Inflation in the UK fell to 1.8% in January, it’s lowest point in two years, according to the Office for National Statistics.
Measured by the Consumer Price Index, inflation is down from 2.1% in December 2018. It is the first time since January 2017 that inflation has gone below the 2% target set by the Bank of England.
Lower energy and fuel prices have contributed to the fall in inflation. Ofgem introduced an energy price cap on January 1, causing the price of gas and electricity to fall. However, the inflation rate is set to rise again soon as the regulator has announced the price cap will increase by 10.3% in April. Any fall in the value of the pound after Brexit would also cause inflation to rise above the target once again, according to economists.
“Were the pound to weaken significantly again, inflation would quickly rise above the Bank of England’s target band as it did after the referendum in 2016,” said Mike Jakeman, a senior economist at PwC. “Alternatively, if companies were given the certainty they crave over the UK’s future trading relationships, a surge in business investment could act as a mild demand shock that would push up prices.”
Jobs At Risk As Utilitywise Goes Into Administration
Energy broker Utilitywise has called in the administrators, putting around 1,000 jobs at risk.
The struggling Newcastle-based firm, which help small businesses find gas and electricity contracts, put itself up for sale just two weeks ago. They claim they have not been able to raise enough funding to cover losses or pay off their debts.
Utilitywise have announced that their business will cease trading immediately, and they have appointed FTI Consulting to manage the administration process.
A statement from the company read: “The formal sale process for the Group announced by the board on 28 January 2019 did not result in any offers to acquire the Enterprise division, or the Group as a whole. Consequently, the directors of UTW sought the appointment of administrators.
“The administrators have taken the decision to cease trading for the Enterprise division immediately but are continuing the sales process for UTW’s subsidiary companies.”
Utilitywise, which was launched in 2006, had around 1,000 employees at the time of its closure. However, just last year they had around 1,600 employees. Shares in the energy broker were at 1.9p when they were suspended on February 1, a huge fall from their peak value of 370p back in 2014.
200,000 Customers Left EDF In 2018
One of the UK’s major energy suppliers, EDF Energy, lost 200,000 customers last year amid challenging market conditions.
The Big Six energy supplier saw their annual earnings fall 16.5% in 2018, down to £691 million, according to their French parent company, EDF. They cited a decrease in nuclear power production as a reason for their lower earnings. However, total sales in the UK rose by 3.9% last year, up to £7.9 billion.
The lower earnings last year came despite EDF Energy raising their gas and electricity prices on two occasions. Customers saw their bills rise 2.7% in June 2018, while in August they experienced another price hike of up to 6.1%.
A statement from the energy firm said: “The supply activities benefitted from increases in residential tariffs, although the residential customer portfolio showed a year-on-year decrease of -4.2% in a highly competitive environment.”
EDF Energy now have just 4.9 million residential gas and electricity customers in the UK. The Big Six suppliers have been faced with increased competition in recent years from new entrants to the market, with over 60 small suppliers now offering the same services. While smaller challengers only had a 1% market share just 7 years ago, they now supply about 25% of households in the country.