Powergen inflicts bills misery

By ADRIAN LOWERY
Updated: 03:39 EST, 18 August 2006

MILLIONS of households were slapped with another big fuel bill hike today as Powergen announced it is increasing its gas prices by 18.4% and its electricity charge by 9.7%.

The rise will add on average about £100 a year to customers' gas bills, and £22-£35 to the average electricity bill.

The hike follows Powergen's massive March increases of 24.4% to gas and 18.4% to electricity and will kick in almost immediately, on 21 August. British Gas recently also raised its rates for a second time this year.

The latest rise will mean that Powergen has more than doubled its average gas bill since 2003, while its electricity bill has gone up 62%.

According to gas and electricity watchdog Energywatch, this means Powergen is now vying with British Gas as the most expensive gas supplier (depending on how you pay).

The watchdog added that gas customers switching away from Powergen to the cheapest alternative could save £120 per year. Meanwhile, electricity customers will save £80 a year by switching to the cheapest alternative.

Adam Scorer, energywatch Director of Campaigns, said: 'While many question the value in switching, some consumers are paying £250 more than they need to. It can make good sense to compare and switch suppliers. Changing the way you pay for energy and eliminating wasted energy can take the some of the sting out of price rises as well.'

The German-owned supplier blamed an 87% increase in the cost of buying wholesale energy to sell on to its customers in the UK since the beginning of last year.

Adam Scorer added: 'Powergen, like all suppliers, may struggle to sustain its profits as a UK retailer, but it has a strong electricity generation business and its parent company (EOn) enjoys bumper profits from the inflated wholesale price of gas.'

Paul Schofield, head of utilities at price comparison website moneysupermarket.com, said: 'These companies all agree there are efficiencies to be made and that these inflated "wholesale gas prices" will fall. Yet none are willing to take a short-term hit in the pocket, instead forcing it on the consumer.

'Powergen recently announced a 26 per cent drop in profit, but it isn't fair for the consumer to have to fork out to bump the profits back up again.

'Customers may now want to consider Powergen's capped deal fixed until 2010 – but they may want to switch to EDF Energy for the cheapest capped deal currently available.'

Ann Robinson, director of consumer policy at uSwitch.com, said: 'Consumers should now start turning their attention to the coming winter, and how they're going to afford to heat and light their homes when their bills have risen by a staggering 44% since June last year.

'Millions of households will find themselves in fuel poverty. Those households who have yet to review their household bills this year would be well advised to check that they are on the best available deal before winter sets in.'