Energy News

Energy bill increases ‘more likely from small providers’

Thursday, 06 May 2010

By Garnet Roach - garnet@consumerchoices.co.uk

Customers of small energy companies are more likely to face price rises, according to new research.

Ovo Energy customers saw an 8% increase in fixed-rate tariffs last week, though the provider was previously the cheapest on the market.

Gareth Kloet, from price comparison site confused.com, said that small gas and electricity providers were often more vulnerable to changes in wholesale prices. "Smaller energy companies traditionally exhibit greater sensitivity to movements in the wholesale energy markets," he said.

"While they are often the first to pass on reduced prices in a falling market, unfortunately they are also often among the first to raise prices as wholesale prices rise."

The comments followed new figures released by the Organisation of Economic Co-operation and Development which revealed that the inflation rate in UK energy prices stood at 8.5% in March.

But Chris Eagle, energy expert at Energychoices.co.uk, warned that price rises were expected across the market: “Energy giant Npower will be putting up prices for many of its online customers this week and rising wholesale prices have sparked fears that more energy providers will soon put up their prices too.

“If your deal is coming to an end, or if you're worried about rising costs, compare energy prices, find the best deal for your area and switch,” he advised. “Paying by direct debit and choosing paperless billing can also cut the cost of your bills,” added Eagle.