Npower orders second price rise

ENERGY company npower is to increase the cost of gas and electricity for the second time this year, it confirmed today.

The move from the UK's third largest supplier, with 6.3m customers, will see gas prices rise by 11.8% and electricity by 7.6%.

This comes just two weeks after British Gas announced price hikes for its 12m customers.

Npower said the increases were in response to a significant rise in wholesale gas and electricity costs and would come into force on 1 October.

'We realise that any increase is unwelcome and has implications for households trying to manage their bills,' said David Threlfall, chief executive of npower retail. 'Our new rates will be frozen until 2006, allowing all our customers to budget with confidence.'

Npower said an unprecedented rise in wholesale gas costs of nearly 40% over the past year had affected all suppliers. This in turn affected the cost of electricity, as 40% of the UK's electricity is produced by gas-fired power stations.

British Gas said last month that household gas bills would rise by 12.4% and electricity by 9.4% from 20 September.

Last month, EDF Energy, which owns London Energy, Seeboard and SWEB, raised domestic gas prices by 3.5%, adding £12 to annual bills, and electricity bills by 3.8%, adding £10 a year. In March, EDF raised gas bills by 4.6% and electricity by 6.7%.

In July, Scottish & Southern Energy, owner of Scottish Hydro Electric and Southern Electric, raised household bills by 9.1%.

Ofgem has urged consumers unhappy with risers to switch to the cheapest suppliers.

Wholesale gas prices have risen sharply, partly because they are linked to record-high oil prices. Traditionally, gas tends to mirror oil price movements as demand rises when oil is expensive.

Another reason is that North Sea gas is running out and the UK is having to import more highly priced gas.

However, industrial gas consumers have asked regulator Ofgem to investigate the price spike. The Major Users Energy Council, has said a number of suspicious factors had been driving up prices much higher than abroad.

'We are very concerned,' a spokesman said. 'We need an investigation into this whole issue. There is no good reason why gas should be 40% more expensive here than in the United States.'

The council claims there have been unusual buying patterns of gas recently which appear to have inflated the price.