Energy Bills: EDF Confirms 3.9% Average Rise

EDF Energy is to raise its average gas and electricity bills by 3.9% from January 3, gambling that the Government will soon strip some costs away from households.

The company – the fifth of the so-called ‘big six’ firms to announce a winter increase – said its rise was less than half the size of those announced by British Gas, SSE, Scottish Power and npower to date and meant its new standard variable tariff would rise by £49 annually to £1,300.

Some 2.4 million households will be affected by EDF’s decision, with around a third of its customers on fixed-tariff deals.

Only E.ON is yet to confirm a rise among the major players but reports suggest it is planning to anounce later this month an average increase of 6.6% from early 2014.

EDF claimed its pricing would save the typical customer at least £80 compared with those other major energy suppliers who have increased prices.

The company said its limited increase was based on a decision to holding back rising costs, including those from the Government’s ECO social and environmental scheme, for now after the Prime Minister pledged to “roll back” on green levies.

Its statement read: “The company has taken action ahead of the outcome of the Government’s review of the costs of ECO and other schemes.

If the Government makes bigger changes to the costs of its social and environmental schemes than EDF Energy has anticipated, the company pledges to pass these savings onto customers.

However, if changes to social and environmental programmes are less than anticipated, the company may have to review its standard variable prices again.”

Ministers are examining whether the bulk of the costs – expected to amount to £158 annually for the average dual fuel customer next year – should be taken out of bills and placed under general taxation instead to help bring down bills.

EDF said its decision meant it would be more difficult for its residential supply business to be profitable next year, but the company believed it was important to limit price increases for hard-pressed customers.

News of the increase was made amid a furious debate on energy pricing – prompted by Labour’s pledge to freeze bills for 20 months if it wins the 2015 general election.

Ministers are keen to promote greater competition – and the value of switching suppliers – while the Energy Secretary Ed Davey is to warn that customers are not “cash cows” to be squeezed for profits by the shareholders of energy companies .

Sky’s City Editor Mark Kleinman learned on Monday that the industry was mounting a fightback  under the growing pressure from politicians, with a report demonstrating its value to the UK economy.

The study suggested it contributed more than £100bn in total last year.

In EDF’s statement on Tuesday, its chief executive Vincent de Rivaz said the industry must “challenge the cost and affordability” of Government green schemes.

He added: “I know that price rises are always unwelcome, but we have taken the first step to show what can be done if rising costs are tackled head-on.”

While repeating his earlier call for an inquiry into soaring prices across the sector, he added that green levies and social programmes needed to be more affordable.

Consumer groups gave a cautious reaction to EDF’s decision.

Tom Lyon, energy expert at uSwitch.com, said: “Any winter price rise is a blow to consumers as it makes the struggle to afford to stay warm that little bit harder.

“However, EDF Energy is to be applauded for the stance it is taking by factoring in the potential reduction on green levies into its calculations.

“This means that customers will know up front that they will benefit from any step the Government takes to reduce the impact of ‘hidden’ taxes on bills.

“More importantly it also challenges the Government to put its money where its mouth is and to make good its pledges on affordability.”

Energy Bills: EDF Confirms 3.9% Average Rise