Yet another energy provider hikes rates

The last of the `big six' group of energy companies has announced rate increases...

‘A lesson in damage limitation’ seems an apt description of EDF Energy’s press release explaining the provider’s latest round of rate hikes. Indeed, instead of announcing a price rise, EDF is instead announcing the limiting of a price rise. Smooth.

But despite this linguistic jiggery-pokery, one fact is laid out bare for all to see: from mid-November, millions of households will be shelling out more for their gas and electricity...

Relentless hikes

EDF Energy will be upping gas rates by 15.4% and electricity by 4.5% from 10 November. This should push up the average annual price of a dual-fuel tariff with the supplier by £114 from £1,051 to £1,165.

The provider blamed the increases on a rise in wholesale costs that it said could no longer be absorbed by the company.

EDF is the last of the ‘big six’ group of energy companies to introduce a second round of price hikes in less than a year. The most recent rate increases came into force last week when SSE and E.ON hiked electricity prices by around 11% and gas prices by 18%.

Fuel poverty

According to some estmates, this latest round of price increases has caused the average annual energy bill to jump by 14.2%, from £1,132 before the hikes to £1,293 now.

What’s more these rate hikes are pushing swathes of people into fuel poverty – that’s where a household spends more than 10% of their net income on fuel to heat their home. The debt charity Consumer Credit Counselling Service says that almost a third of the people who contacted them in the first half of this year were already in fuel poverty.

Lack of understanding

When announcing the price rises, EDF Energy also said that it was important to address the “suspicion” that many people currently had of the utilities industry.

Indeed, in light of the recent price hikes, the energy regulator Ofgem has appointed the forensic accountants BDO to look into the takings of energy companies. Specifically, the team will be examining the allegations that energy firms understate profits to justify higher rates.

Smallest hikes

To be fair to EDF, the company has made its rate move later than the other five main suppliers and has upped prices by less than its competitors. However the hike will still hit financially stretched consumers hard in the pocket. And that’s why it’s important that you know your rights when it comes to fighting back against energy price increases.

All energy companies have to give customers 30 days notice of any rate increase. And indeed, EDF Energy will be writing to all current customers to inform them of the tariff change. From here, you have 20 working days to reject the rate rise and a further 15 to make arrangements to switch suppliers.

The whole switching process should take around six to eight weeks. And throughout this period, your energy supplier has to keep you on your current, lower tariff.

So where should you switch to?

Some rates are dropping

Not all energy tariffs are ballooning in price. In fact, some are dropping. This is because the widely-publicised price hikes that every energy provider has engaged in over the last year generally do not apply to fixed and online tariffs.

And here are some of the best rates around at the moment – courtesy of energyhelpline.com...

*After £30 cashback. New customers only.

All of the above deals are available through the lovemoney.com energy comparison centre. You’ll have to be quick to snap up these deals though, as they are often only on sale for a limited period. The cheapest EDF Fixed S@ver v2 tariff will almost certainly be pulled soon, as it only runs to 30th September 2012.

Keep switching

Now, despite the attractive visage of these fixed tariffs, the energy providers do have something of an ulterior motive in rolling them out. When the fixed term comes to an end, you’ll be pushed back onto their standard rate. And surprise, surprise; these are the same standard rates that have been relentlessly hiked over the past year. Indeed, this is where the energy companies really make their money.

So to ensure that you are constantly getting the best deal you’ll need to continually compare prices and switch when each fixed rate period comes to an end.

And you can find all of the top deals around at any point by using lovemoney.com’s own energy comparison tool.

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