Energy profits and price hikes

This winter's price hikes have added a staggering £630 million onto British household energy bills says uSwitch.com, the independent price comparison and switching service. In total, almost 28 million customers have been affected by price rises, with the average annual bill now going up by £63 or 5.9% to £1,132.

All of Britain's big six energy suppliers have now increased their prices. The final one to make the move, EDF Energy, sees its hike come into effect today (2nd March). On average, suppliers have increased their prices by 5.6% or £35 for gas and 6.4% or £28 for electricity. The grim tally comes just a week after Britain's biggest supplier, British Gas, revealed a 24% increase in residential profits. It increased its prices in December.

Worryingly for consumers, this round of price hikes brings an abrupt end to a two year period of falling prices and brings the average bill up to £1,132, just £21 lower than when prices were at a peak in January 2009.

Consumers are now paying £313 or 38% a year more for their household energy than at the beginning of 2008. But, interestingly, the difference between the cheapest energy plan in the market and the most expensive is now £316 a year. This gives consumers a golden opportunity to take their household energy prices back to 2008 levels just by ditching old fashioned and expensive standard tariffs and moving to a competitive online energy deal instead.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "March marks the end of a round of energy price hikes that brought misery to British households this winter. EDF Energy will become the last of our big six suppliers to increase its prices, but at least by holding off until March it protected its customers through the coldest months. Unfortunately the same cannot be said of its rivals and as a result profits and price hikes will be on Ofgem's radar as it looks to shake the market up.

"The results of Ofgem's investigation cannot come too soon. With only around 3.5 million or one in ten households (13%) on suppliers' cheapest energy tariffs, consumers really need to start using the competitive market to help themselves. Anything that Ofgem can do to give more people the confidence to do so has to be welcome.  

"This winter's price hikes have opened up an opportunity for consumers to turn the clock back on their energy bills and take them back to 2008 levels. The difference between the cheapest and most expensive plan in the market is £316 - I would urge anyone who hasn't yet ditched their old fashioned and expensive standard tariff to do so now and move to a competitive online plan instead. In a time of rising prices our best defence is to use less energy and to pay the lowest possible price for what we do use."