Co-op Energy unveils shock 2.4% price hike

Co-operative Energy has announced a shock 2.4% increase on its popular Pioneer tariff, increasing the typical annual bill for someone paying by monthly direct debit from £1,148.42 to £1,176.43, or over £28 a year.

Existing customers are being given the statutory 30 days’ notice of the increase, and will move to the higher costs when they are introduced on May 27.

The typical annual cost for those paying by cash or cheque on receipt of their bill will rise to almost £1,240. Those who pay by direct debit are rewarded with a discount on their bills.

The hike has taken the market by surprise. Earlier this month, Ovo and First Utility announced tariffs below the £1,000-a-year level.

These moves were welcomed as a sign that firms outside the Big Six (British Gas, EDF, Eon, Npower, Scottish Power and SSE) were grasping the nettle of competition to the benefit of consumers – which is why Co-op Energy’s move has created shockwaves.

‘Out of the blue’

Kevin Pratt, energy editor at MoneySuperMarket, said: “This price hike has come out of the blue at a time when many energy providers, especially smaller players, are doing all they can to make tariffs as low as possible for their customers.

“The Co-op has previously suggested it was removing itself from price comparison websites as it believed this would save money and enable it to keep costs low for its customers. This is clearly not the case as the Co-op has given up its status of being cheaper than the Big 6, and now features further down the energy tariff table.

“The news also comes at a time when many fixed rate deals are coming to an end – so it’s a stark reminder for customers to switch providers. MoneySuperMarket has identified energy tariffs that have finished since March 31 or will expire before the end of April 2014.

“Customers on these products face the prospect of an automatic price hike of up to £210 if they don’t act soon to switch to a better priced deal.”

You can read more about the fixed rate tariffs nearing their end-dates here.

Switching surge

The warmer spring and summer months push energy bills to the back of many consumers’ minds. But failing to act when their existing deal ends will mean they’ll be paying more than they need for the gas and electricity they do use.

And the additional risk is they’ll forget to switch in time for the cold winter months when their usage will soar again.

Earlier this week, the energy market regulator, Ofgem, called for people to shop around for savings on their energy costs – something we at MoneySuperMarket have been advocating for years.

You can read more about Ofgem’s ‘Be an energy shopper’ initiative here. And you can compare energy prices and switch providers using our comparison service.

‘Government costs’

The Co-op has blamed the price rise on, “the need to finally pass on energy industry regulated costs including Energy Company Obligation (ECO), Renewable Energy and Feed-In Tariffs as well as increases in distribution and transmission costs.”

In autumn 2013 the provider said it would ‘absorb’ the burden of the increase of costs placed on it through the winter months but that it “would have no alternative but to review this decision if we have misread the signals”.

Its latest statement says: “While some costs have been removed we are still experiencing a number of increases that came into play from the start of the year and from the 1 April. Therefore, we have had to take the difficult decision to increase our prices in line with this.”

Ramsay Dunning, group general manager, added: “We are not increasing prices to reward financial investors. We are simply no longer able to absorb these government-imposed costs.”

Top 5 Energy Deals

 Provider

 Tariff name

 Tariff type

 End date

 Average price

 First Utility

 iSave Fixed v20 July 2015

 Fixed

31/07/2015 

 £994.48

 OVO Energy

Cheaper Energy Fixed 
(not available in Scottish Hydro region) 

  Fixed 

One year
from sign
up date 

 £998.09

Flow Energy 

 Thames Online Fixed
September 2015

 Fixed

 30/09/2015

 £1,010.08

Extra Energy 

 Fixed Price September
2015 v2

 Fixed

 30/09/2015

 £1,014.43

Green Star Energy 

 Fixed 12

 Fixed

 One year
from sign
up date

 £1,051.59

Sourced by www.moneysupermarket.com 24/04/2014

Standard MDD Tariffs (Co-op Energy and 'Big Six' only) 

 Provider  Tariff name  Tariff type  Average price
 EDF  Standard  Variable  £1,163.60
 e.on  Energy Plan  Variable  £1,169.50
 Co-operative Energy  Pioneer  Variable  £1,176.66
 SSE  Standard Energy  Variable  £1,182.27
 Scottish Power  Standard Online  Variable  £1,188.62
 British Gas  Standard  Variable  £1,193.01
 npower  Standard  Variable  £1,204.91

Sourced by www.moneysupermarket.com 24/04/2014

* 51% could save at least £174, MoneySuperMarket Data, Dec 2013

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