Co-operative Energy has increased the prices on some of its tariffs by up to 28%, with standard customers likely to be paying more than they would with one of the “big six” providers, and as much as £300 more than the market’s cheapest deal.
Energy prices in general look set to be moving upwards after a two-year lull, experts have warned. And from 1 October customers on the Co-op’s standard variable dual-fuel tariff – which customers are placed on at the end of a fixed-term contract and which is already one of the most expensive on the market – will see their annual bills rise 3%, which on average means an increase from £1,152 to £1,184.
Joe Malinowski from energy price comparison website TheEnergyShop, says he is bemused as to why a firm that championed its role as one of the challenger suppliers has upped its prices in this way at a time, he says, when wholesale gas prices fell by 8% in August – the first fall in five months.
Over the past two months the Co-op has increased the price of its cheapest tariff by £219, or 28%. So where the Co-op Fix for Longer September 2017 tariff was a very competitive £770, the Co-op Online October 2017 deal is a distinctly average £989 a year. Existing customers will also see prices rise.
“It is unusual to find a mid-tier energy supplier offering worse deals than the standard tariffs of the big six,” Malinowski says. “But the average user on the Co-op’s standard tariff will be paying £49 a year more. This wasn’t supposed to happen to a company that came to the market to attack the dominance of the big six. Co-operative Energy customers should cut and run now for a spectacular saving of £374,”
The company, which went into a customer service meltdown last year, has denied it is scaling back its energy venture. A spokesperson for Co-operative Energy said: “We do our best to protect customers from price rises and wherever possible pass on any savings we can, as we did by reducing our gas price in March of this year.
“In recent months, we have absorbed a 19% increase in environmental and social obligations costs as well as an increase in electricity and gas wholesale prices. Unfortunately, this is no longer sustainable and we have reluctantly taken the decision to pass on a small percentage of these costs to our customers by increasing our charges by an average of 3% from 1 October.”
Claire Osborne, energy expert at uSwitch.com, says it is not just the Co-op that has upped the cost of the cheapest deals this summer – 21 energy suppliers have replaced their cheapest fixed-price deal with more expensive plans since June, increasing prices by an average of £23. Meanwhile, EDF, Avro Energy, Flow, GnERGY, OVO Energy and So Energy have raised their prices twice over the summer. Octopus has increased the price of its cheapest fixed deal three times since the start of July.
“Many suppliers are increasing the price of their cheapest deals amid concerns about rising wholesale energy costs and uncertainty in the market following the EU referendum,” Osborne says. “It remains to be seen whether this is just a blip, and wholesale prices still remain well below their high 2013 levels.”
Despite the rises, she says there are still bargains out there. “The market’s most competitive plans are still hundreds of pounds less than the average big six standard tariff. Those who are concerned about their energy bills should look to see whether they can switch to a better tariff and consider fixed deals that can provide protection against further price rises.”
Figures from the energy regulator this week show that despite more UK households switching, 66% are overpaying because they are still on standard variable tariffs. Ofgem has published data which shows that in the six months to the end of June more than two million domestic customers switched electricity company, while 1.64 million moved gas supplier. Many will have moved both together. Ofgem says there were around a million more accounts switched than in the same period last year.
The regulator says the average standard variable tariff of the larger energy suppliers as of 28 July 2016 was £1,066. The cheapest tariff available on that date – a one-year fixed tariff – was £758, a saving of £308.
• The Guardian runs its own energy comparison service that will impartially tell you which firm is cheapest in your area, and according to your consumption. Most of the firms at the top of the table will be names you are unlikely to have heard of. Be sure to check service ratings before you switch, as they vary enormously. It may be worth paying a bit more for a firm with better ratings. It is also available on online at guardianenergycomparison.co.uk or on 0800 634 3874 Mon-Fri 9am-8pm, Sat-Sun 9am-5pm.
