French-owned EDF Energy, one of the so-called Big Six energy suppliers in the UK, has become the latest firm in the group to raise electricity and gas central heating prices. Only E.ON has elected not to increase domestic energy tariffs this year after promising a price freeze on energy prices until 2013.
EDF Energy’s price hike, which comes into force on 7 December, is the largest yet. Late last week, the supplier announced that both gas and electricity tariffs for domestic users would rise by 10.8 per cent. Customers of the firm will now face an average annual dual-fuel energy bill of 1,251, which constitutes a rise of 122 over the year.
Last year, EDF Energy increased the cost of electricity by 4.5 per cent and gas by 15.4 per cent. The firm is reported to have generated profits of more than 1.5 billion in 2011.
Shadow Energy Secretary Caroline Flint blasted EDF for charging its customers with “above-inflation price rises”. The Labour MP said: “People will not understand why EDF are hiking up their bills by so much when they made nearly 1.6 billion in profits last year”.
There does appear to be little justification for such a substantial rise, but Martin Lawrence, Managing Director of EDF, defended his company, insisting that 20 per cent of customers would not be affected by the increase because they were locked in to fixed-price deals. That only leaves 80 per cent of the three million or so customers served by EDF facing the increase.
Mr Lawrence explained: “About half the bill consists of the actual electricity and gas that we purchase on customers’ behalf and here we have seen some increases, but also on the other half of the bill where we incur the costs for transporting and distributing the gas and electricity to people’s homes, these are costs that are regulated by Ofgem and are the same for all suppliers”.
The Managing Director added that environmental obligations were partly responsible for the ‘regrettable’ price rises. How EDF managed to make almost 1.6 billion in profits last year will confound many energy consumers who understand that if almost one half of an energy bill accounts for wholesale fuel costs and the other half accounts for transport and distribution, there is little room for much else.