Why Energy Suppliers Are Raising Prices

By : Chris Tipping |April 24, 2018 |Energy, Energy Blog |0 Comment

Many households and businesses in the UK will be noticing an increase in their energy bills covering the early part of this year, particularly February which saw the country enveloped in an especially cold snap. Obviously, this is partly due to the extra energy consumed battling the unusually low temperatures, but some energy suppliers have been increasing their rates as well.

Different Reasons for Perceived Price Increases

While there are legitimate reasons why energy suppliers increase prices, not all the energy bill increases are due to a direct price rise. Sometimes the higher bills are due to certain discounts and deals being discontinued or removed entirely from the contract, or other such reductions no longer being applicable.

It is also true that the six major energy suppliers who control over 90% of the market in the UK have been known to be raising prices where they can. The government’s energy price cap for standard variable tariffs means there are certain limitations on what energy providers can do in this regard, but there are still areas where they can significantly increase the prices paid by customers in domestic households and in the business sector.

Price Raise Backlash for UK’s Largest Supplier

Last year, the UK’s largest energy supplier British Gas raised the price of electricity for millions of its customers by 12.7%, which was well above inflation. The company suffered a severe backlash in response to this move, with the firm’s share price dropping significantly in value over the remainder of the year.

The massive rate rise was an attempt to offset the reduced profits the company was making due to losing customers to rival suppliers. British Gas also blamed the government’s energy price cap for affecting their profits, even though industry experts are mostly in agreement that the price cap was an essential measure to protect vulnerable members of society from being exploited.

Other Big Six Suppliers Raise Prices

There was something of a fuss made recently by watchdogs and customers of E.ON, another big six energy supplier who has been accused of instigating a ‘stealth hike’ on the energy prices of millions of their customers.

The company attempted to quietly discontinue dual-fuel discounts and reductions for paperless tariffs, resulting in an average increase of £22 per year for each of their customers. It has also been revealed that one in four of their customers who are on their standard variable tariff will be paying an extra £50 per year.

More Price Rises to Come from Big Six

It is believed such a significant price rise is just the beginning of a series of price hikes by the big six energy suppliers. While price rises have always been a part of the process, there is an extra bite to them recently thanks to the increased competition offered by much smaller energy suppliers. While the big six are raising prices to supplement their reduced profits, their smaller rivals are increasing their share of the market as more and more customers seek better deals.

If you want to learn more about the ideal tariffs for your business, get in touch with Business Save’s team of highly experienced energy experts.


About Chris Tipping

Chris has been working with Business Save helping promote and grow their website presence.

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